Government announces £2.3bn business rates support package
There was good news for those campaigning against the current business rates system in the Budget today.
The government said it would provide a further £2.3bn of support over the next five years to businesses to reduce the burden of business rates, and that rates evaluations would take place every three years.
Chancellor Philip Hammond announced he would bring forward the planned business rates switch from RPI to CPI by two years, to April 2018.
Calling small businesses “the backbone of the economy”, Hammond also said he would freeze the VAT threshold at £85,000 for the next two years.
Ian Borley, head of KPMG Enterprise, said: “The Chancellor’s announcement that he is doubling the Enterprise Investment Scheme allowance is a positive step in helping early stage businesses attract investment and raise finance. Not only will this help to boost investment in startups, but it potentially plugs a funding gap if the European Investment Fund is no longer available when the UK leaves the EU.
“The Chancellor is right to acknowledge that the UK is becoming an even more fertile ground for new businesses to start up, but the reality is that the scaling up of these businesses is the most difficult and important area to focus on. It is usually at this point where lots of our startup enterprises gravitate to more supportive environments such as the United States.”
The Chancellor also had good news for pub operators, adding that he would extend the £1,000 discount for pubs with a rateable value of less than £100,000 for one more year to March 2019.
Hammond said that the government will be legislating retrospectively to address the so-called “staircase tax”. Affected businesses will be able to ask the Valuation Office Agency (VOA) to recalculate valuations so that bills are based on previous practice backdated to April 2010 – including those who lost Small Business Rate Relief as a result of the Court judgement. The government says it will publish draft legislation shortly.
Marc Abrams, tax partner at KPMG in the East Midlands, said: “Business was looking for a Budget with few surprises – and, thankfully, that’s what they got.
“The Chancellor avoided introducing any further complexity into the tax system, and it is encouraging to see him use tax policy as a lever for growth and investment as we approach Brexit.
“There were measures to improve competitiveness and innovation and a commitment to continue with a competitive corporate tax environment – things business crave – but the sharp reduction in economic growth forecasts threatens to overshadow.”
Mike Tuhme, tax partner at KPMG in the East Midlands, said: “Behind the headlines, there is a raft of changes in tax administration.
“The most significant in terms of the impact on Government finances is the spend-to-raise package provided by the Treasury.
“This will give HMRC £155m over the next five years to raise an estimated £2.3bn, which will be an impressive return on investment. The package is mainly targeted at closing the tax gap and should help HMRC continue to tackle all forms of non-compliance.”