Tax & admin · 12 October 2017

Chancellor signals end to staircase tax, handing lifeline to thousands of firms

The chancellor admitted that the staircase tax created uncertainty for many small business owners
The chancellor admitted that the staircase tax created uncertainty for many small business owners

Chancellor Philip Hammond has given the first indication that the so-called “staircase tax” could be scrapped altogether, following pressure from both MPs and the small business community.

Addressing the Treasury select committee on Wednesday 11 October, Hammond revealed that legislative action to scrap the levy was “certainly something we are looking at”, admitting it created uncertainty for thousands of small firms.

Under staircase tax rules, companies operating over several floors within the same property would be handed separate business rates bills for each occupied floor, as opposed to one assessment for the entire premises. The backdated tax was initially introduced after a landmark Supreme Court ruling in August.

The levy, expected to put around 30,000 small England and Wales businesses in line for even further backdated increases to business rates bills, was quickly unpopular with small business owners and MPs from all parties when it was first tabled.

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The Valuation Office Agency (VOA), responsible for calculating business rates, had also confirmed that affected business owners would not be able to access any transitional relief scheme for additional bills.

Welcoming Hammond’s comments to the select committee, Mike Cherry, chairman of the Federation of Small Businesses (FSB), said legislative action would be needed as soon as possible.

“The staircase tax has heaped misery on thousands of small businesses that happen to occupy split workspaces,” he said.

“The chancellor’s words will come as welcome relief to the desperate firms who had absolutely no idea that bill hikes were coming down the line.

“The chancellor’s decision marks a victory for common sense – he’s done the right thing. We look forward to his words becoming action at the Budget, if not before.”

Echoing Cherry’s comments, Conservative Party MP Charlie Elphicke said it was “great news” that the government was listening to the concerns of small business owners.

Liberal Democrat leader Vince Cable had also spoken out against the staircase tax. When it was first introduced by HMRC in August, he said: “Many businesses are already being clobbered with higher rates, the last thing they need is to be hit with these backdated payments.”

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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