The Chancellor, George Osborne, delivered his Autumn Statement today. The two key announcements affecting businesses relate to the reforms to business rates and the extension of the small business rate relief.
Business rates is a type of tax that is calculated according to the rental value of the property that a business uses. With many businesses now based on the internet, critics have queried why a company should be taxed based on the physical space it uses.
There has been criticism of the existing structure of business rates for some time, with many arguing that it is outdated and should be abolished for smaller businesses altogether.
Last year, the Chancellor announced cuts to business rates and pledged to a full review of the controversial tax in this year’s statement. However, in this year’s statement, the Chancellor announced that he is delaying his review until next year’s statement. In the meantime, local councils have been handed complete control of business rates. This means that local councils will be given the power to reduce business rates for struggling businesses or increase them to help “fund key infrastructure projects” that will improve the local area.
This announcement will not be welcomed by many businesses, with many pushing for the overall business rates system to be abolished, rather than just devolving existing powers to local councils.
Small business rate relief
The scheme, which provides relief on business rates to small businesses, has been extended for a further year. It provides 100% relief for properties with a rateable value of £6,000 or less and gradually decreases from 100% relief to 0% relief for properties with a rate-able value between £6,001 and £12,000.
If you would like to discuss how either of these announcements might affect your business then please don’t hesitate to get in touch with one of our commercial solicitors.