Business rates a ‘ticking time bomb’ for small firms

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Business rates are a “ticking time bomb” for small companies in England which should be offered emergency help, the shadow business secretary has said.

Labour’s Rebecca Long-Bailey said many firms faced “cliff-edge” rises when new valuations take effect in April and that the process had been mishandled.

The government says it has established a £3.6bn transitional fund to help businesses facing big jumps in rates.

A spokesman said the changes meant all businesses would get a “fair deal”.

‘Outdated tax’

However, Ms Long-Bailey said: “The reality is that business rates are a ticking time bomb.

“It cannot be right for smaller town centre retailers to be facing massive hikes while the Amazons and ASOSs of this world have their business rates cut.”

Labour’s plan would include a fund worth £150m a year for the next three years for small and medium-sized firms at risk of bankruptcy due to “sharp and unmanageable” increases.

It would be distributed by councils under already established powers to provide discretionary relief, with the cost covered by central government.

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Shadow business secretary Rebecca Long-Bailey will be meeting business organisations to discuss rates on Monday

In the long-term, the system should be fundamentally reformed to ease the burden on high streets and town centres, Labour said.

On Monday Ms Long-Bailey will be joined by shadow chancellor John McDonnell and shadow communities secretary Teresa Pearce for a discussion with business organisations including the Federation of Small Business (FSB), the British Retail Consortium and the British Chambers of Commerce.

FSB national chairman Mike Cherry said business rates were an outdated tax. “The FSB is keen for all political parties to help those small firms hardest-hit by the current revaluation, and to start to focus on fundamental longer-term reform of business rates to make sure it’s fair for small firms,” he said.

Property market

Andrew Silvester, deputy policy director at the Institute of Directors, said: “This is a 20th century system and in a 21st century economy, it looks painfully out of date.”

Labour also called for business rates to be indexed to the lower CPI measure of inflation rather than RPI and to exclude investment in plant and machinery from future business rates valuations.

Christopher Richards, of the Engineering Employers Federation, said: “The inclusion of plant and machinery in business rates bills represents a tax on productive investment and undermines the international competitiveness of UK manufacturing.”

A government spokesman said: “The revaluation is designed to bring rates into line with changes in the rental property market and ensures business rate bills more closely reflect the property market and that all businesses are getting a fair deal.”

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