Current Affairs

Autumn Budget 2018: Business rates cut for SMEs and new digital services tax

Chancellor Philip Hammond has confirmed plans to give smaller retailers a 33% cut to business rates and introduced a new digital services tax for companies with at least £500m in global revenue.

The reduction in rates will take place over the next two years and is expected to save businesses £900m. This includes retail businesses with a rateable value of £51,000 or less. A Future High Streets Fund of £675m was also announced to help revive the high street, allowing local councils to invest in the improvements and redevelop of under-used retail and commercial areas into residential spaces.

Hammond also introduced a new digital services tax, which he said was not a tax on goods purchased online and would only be paid by businesses with a global revenue of £500m or more. This is likely to affect the likes of Amazon and Facebook and help the high street compete with strong online firms.

The chancellor announced there would be a new tax on the manufacture and import of plastic packaging that contains less than 30% recycled plastic, however, there are no plans to introduce a levy on disposable plastic cups. Hammond said: “I have concluded that a tax in isolation would not, at this point, deliver a decisive shift from disposable to reusable cups across all beverage types.”

UKHospitality chief executive Kate Nicholls said: “This was a positive Budget for hospitality, recognising and acknowledging our core campaigns around employment costs, business rates and digital paying its fair share – together with a positive outcome on excise duty, latte levy and non-residential capex and investment allowances. We estimate the measures announced in the Budget as a result of our campaigns are likely to save the trade £750m.

“The funds raised by this new tax should be used to ease the unfair tax burdens being shouldered by hospitality businesses to help stop the continued devastation of high streets. If the government is serious about updating the rates system then we still need to see a thorough, root and branch reform of the whole system to ensure it is fair and fit for purpose in the 21st Century.”

She added: “The hospitality sector has already taken, and continues to take, effort to tackle plastic waste and UKHospitality has been working with its members and the wider sector to help drive this. As the chancellor rightly said, a latte levy would not necessarily help tackle waste but would increase costs for businesses and, ultimately, consumers. Avoiding this unnecessary additional tax is very welcome.

“A freeze in the rate of beer, cider and spirits duty, something we have continually called for, will also help avoid an additional squeeze on the hospitality sector.”

Back to top button