From the blog

Are Business Rates History?

16th September 2014

There is renewed debate about whether the system of business rates remains fit for purpose.

For those who don’t know, doctor business rates are applied to commercial premises such as shops, factories and offices. The majority of the money is collected from within town and city centres.

Each property has a value attached to it, and this is reassessed every 5 years. Local councils, who will collect the money, apply a multiplier to this value and turn it into an amount that is to be paid by that property. Most of the money is then passed to central government.

So, in a nutshell, the system is a tax on business premises that, once collected, cannot be spent on the needs of those businesses. Unlike other forms of taxation, business rates does not take account of the ability of the business owner to pay and so a small independent pays the same as a large chain in a similar property.

Also the amount paid by a property in a central area is, almost inevitably, higher than that paid by an equivalent property out of town and businesses that move on-line avoid it completely.

The system does now seem unfair and outdated. For example, at a time when we all want businesses to move back to the high street, we insist on a tax that encourages them to move out of town or trade exclusively on the internet.

I look forward to seeing what the various Parties in contention at the next General Election have to say on the matter. If a change is to be made, various aspects require consideration in my view. Evening out the disparity between in town, out of town and on-line will be important; taking account of the size of business as well as the size of premises, should be possible; and allowing Councils to keep more of what they collect could incentivise new investment.

Over to the politicians!