The government’s tax reform announcements may have been universally described as a damp squid but there is some good news within it for agents who pay business rates.
This is within an interim report buried within the announcements by HM Treasury, and concerns its ongoing Business Rates Review. This is due this Autumn and follows last year’s consultation on rates reform.
This has all been under way as Covid has struck. Business rates increases have been frozen and retail, hospitality, leisure (and estate agencies after industry lobbying) have been given a £10 billion rates holiday until April this year, after which it tapers off depending on whether a business is able to open its premises or not.
But many businesses have called for an extension of the 100% discount until later this year, HM Treasury says, because they are worried it doesn’t give them enough time to get their finances on an even keel.
Direction of travel
But today’s interim report points to the direction of travel after the pandemic has receded and the economy is back on track.
This includes reducing rates complexity and in particular the thick red tape that clogs its reliefs system, which many SME agents say favours smaller firms.
It is also considering whether rates should be based on ability to pay, turnover or profits rather than size of property, bringing the duty in line with corporation tax.
But the reports says there was little or no support for a much cherished idea among businesses – to make property owners pay the duty through a ‘capital values tax’.
HM Treasury says this would be difficult to collect, and that valuing properties would be problematic.
One thornier problem swerved by the Business Rates Review interim report is online estate agents, many of whose franchisees operate virtually from their homes and who, therefore, avoid paying business rates altogether.