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Business rates reform needed

The Treasury Committee believes the current business rates system in England and Wales is “broken” and in “urgent need of reform”.

Business rates are a tax on property used for business purposes, and calculated based on a property’s estimated value on the open market. Rates are revaluated every three years.

The committee said that business rates generated £31 billion for the Treasury in 2018-19, outpacing the rate of inflation. It argued that high street retailers are battling with online rivals that do not face the same tax burden. While various reliefs have been introduced in recent years, the committee claimed those reliefs have done little to address this issue.

Alison McGovern, the Treasury Committee’s lead member for this inquiry, said: “The tax represents an increasing burden on businesses, particularly those with a physical high street presence struggling to remain competitive. Odd reliefs here and there are nothing more than sticking plasters to a system in urgent need of reform. The Government must examine such alternatives [to the existing system] in time for Spring Statement 2020.”

Mike Cherry, chairman at the Federation of Small Businesses (FSB), added: “As this report rightly sets out, the business rates system is broken, causing businesses and investment to flat-line. The current check, challenge, appeal system is diabolical with the number of challenges progressing falling by 99.3%. Shockingly, it could take up to 950 days – more than two-and-a-half years – for a business to appeal a business rates bill and many small firms give up.”