The Government has responded to the Treasury Committee’s business rates inquiry. In the response, the Government commits to carrying out a fundamental review of business rates, producing a guide to business rates reliefs in England, and taking the committee’s recommendations into account when designing the next transitional relief scheme.

The fundamental review of the business rates system will consider in detail many of the issues raised by the committee and identify options to address those concerns. Further details on the fundamental review will be announced in due course.

In response to the report, CTG commented: “We welcome the confirmation that the Government has no plans to review existing business rates reliefs and makes a point of highlighting the value of charitable rates relief in supporting local communities. Rates relief is extremely valuable to the sector and is worth over £2bn a year in England alone. We are aware that the Government is planning a wider review of business rates later this year and will be calling for charity rates to be protected (and charities left no worse off) and where possible strengthened (with greater access to discretionary relief)”.

More information on the most recent statistics can be found here.

 

In the report, Recommendation 3.1 is worth highlighting specifically – it says:

“The number of reliefs that are needed for business rates to work indicate a broken system. Each additional relief adds a further layer of bureaucracy to an already complex system. HM Treasury should review all business rate reliefs to ensure that they remain necessary. (Paragraph 51)

 “Response:

“3.2 The Government does not agree that the number of reliefs available under a particular tax can be taken as evidence that a tax is ‘broken’. Tax reliefs are introduced for many different reasons. While some may be intended to address concerns about the function of the tax system, they may also be used to provide support to certain sectors, or to incentivise particular behaviour.

“3.3 The Government provides support through business rates reliefs to, for example, the smallest businesses through Small Business Rate Relief (SBRR) and to retailers through the retail discount. Doubling the threshold for SBRR from April 2017 means that more than 675,000 of the smallest businesses now pay no rates at all.

“3.4 Business rates reliefs for charities and small businesses support these important features of our society, which bring benefits to communities and local economies.

“3.5 Most ratepayers are only likely to be eligible for one or two reliefs. In most cases it will be clear which these are, depending on the type and rateable value of the property concerned.

“3.6 The Government aims to target reliefs where support is needed most. A decision to remove a relief is equivalent to a decision to raise more revenue through business rates, so would require careful consideration.”