BUSINESS RATES will be capped from April next year and small high street stores will receive a further discount, but some argue that the chancellor did not go far enough in the latest Autumn Statement.
The rate will be capped at 2% from April next year, chancellor George Osborne announced which is a reduction from the nearly 3% rise that was anticipated.
Osborne went further to add that high street businesses with a rate of £50,000 or less will receive a £1,000 discount for two years.
However John Longworth from the British Chambers of Commerce told BBC’s Today programme that the rate changes are “good but not good enough”.
His argument was backed up by Blockbuster administrator Simon Thomas who argued that it is still a huge burden on businesses.
“The group [Blockbuster] was paying a sizeable £3.8m on a turnover of £40m. Even if, as speculated, the rates increase were capped at 2% Blockbuster would have faced an increase of £75,000 on an already considerable £3.8m.
KPMG’s head of retail David McCorquodale goes further claiming the burden has not really been recognised as such and companies are struggling to pay.
“Rates have become one of the retail industry’s biggest costs and biggest burdens, outpacing rents, revenue growth and curtailing the amount retailers are able to invest back into their business. A cap rather than a freeze still means a rise in costs,” he said.
However, Vince McLoughlin from Russell New, said freezing rates had brought some welcome relief.
“Freezing business rates has eased the burden on businesses and given time for the tax to be reformed over the next couple of years.
“Although the signs of recovery are evident, it would be foolhardy to stifle that growth by hindering businesses with additional costs.”
The various reliefs, including capping the increase in business rate increases at 2%, and the £1,000 discount, will cost the Treasury £2.5bn. However, an increase in the bank levy is set to recoup a similar figure up to 2018/19.
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