The government has helped soften the blow of April’s business rate revaluation with a £300m relief fund for local councils.
The announcement was made by chancellor Philip Hammond at today’s Spring Budget, in which he said business rates raise £25bn each year – all of which, by 2020, will be used to fund local government.
In addition, Hammond pledged no business losing small business rate relief will see their bill increase next year by more than £50 a month, while all pubs with a rateable value of less than £100,000 will get a £1,000 discount on business rate bills – equating to 90% of pubs.
Taken together, the government’s measures amount to a total £435m cut in business rates, targeted at “small businesses facing the biggest increases, protecting our pubs, and giving local authorities the resource to respond flexibly to local circumstances”, he said.
He added that business rates cannot be abolished, but admitted the government needs to find a better way of taxing the digital economy.
However, in the meantime he said there was scope to reform the revaluation process, making it smoother and more frequent, and to avoid the dramatic increases that the present system can deliver.
In response to the budget, Ufi Ibrahim, the chief executive of the British Hospitality Association (BHA), said: “The £300m spread around England’s local authorities to soften the blow of massive increases in business rates is a tiny drop in the ocean.
“We remain extremely worried that some small hospitality businesses, facing an average 23% rates increase, will be forced out of business. The Chancellor’s move will do nothing to stop the Valuation office being swamped with appeals – and there are still a massive 250,000 businesses waiting for a verdict on appeals made up to seven years ago.”
Hammond also announced that self-employed workers will face a 2% increase in National Insurance contributions in 2018, while the allowance from Dividend Tax will be reduced from £5,000 to £2,000.