Advice firms could benefit from the government's plans to change the calculation cycle for business rates, as announced in today's Queen's Speech.
The Queen’s Speech, unveiled in parliament today (December 19), contained a reference to “conduct a fundamental review” of business rates and the Conservative MP John Redwood had tweeted shortly before the speech was delivered that he expects business rates to be “cut”.
Business rates are a tax on a business's property.
Because the calculation for business rates is made on the basis of its 'rateable' value, meaning it is partly based on where a commercial premises is located, high street based businesses have been hit harder than some online retailers that have their warehouses located in more remote locations.
Part of the problem is that under the current system the rateable value of a property is calculated every five years, and so businesses paying rates based on the value of a high street location could be paying them at a level that might not reflect the declining popularity of high streets in recent years.
Under the government’s plans, the next date for reviewing business rates has been moved forward to 2021 and the revaluations will take place every three years instead of five years. The government will also conduct a wider review of the rates system.
The government statement accompanying the Queen’s Speech stated: “We will also progress legislation to bring forward the next business rates revaluation by one year from 2022 to 2021 and move business rates revaluations from a five-yearly cycle to a three-yearly cycle.
"This will allow the government to press ahead with delivering an important reform that has been strongly welcomed by business.
"More frequent revaluations will ensure that business rates bills are more up-to-date reflecting properties’ current rental values. Moving to three-yearly revaluation will make the system more responsive to changing economic conditions.”
The government's reforms also include switching from RPI to CPI indexation, increasing the threshold for the standard multiplier to £51,000, and doubling the threshold for Small Business Rate Relief.
Minesh Patel, an adviser at EA Financial Solutions in London, said: “Business rates are a substantial part of the cost base of our firm. I think it is about a third of the rent we pay for our business premises, and we have already had word this year that the people who do our website will cost more next year, and the software we use will also go up in price, so a cut in business rates would really help our business."
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