Chancellor speeds up tax changes

Chancellor speeds up tax changes

Philip Hammond has announced he would bring forward the next revaluation of business rates.

The Chancellor of the Exchequer revealed in today's (13 March) Spring Statement that the revaluation will now take place in 2021 rather than 2022.

Last year Mr Hammond said revaluations would take place every three years rather than every five years from the next revaluation.

Today's announcement means the switch to three-yearly revaluations will take place sooner than planned.

Mr Hammond said: "We are reducing business rates by over £10bn and we committed at Autumn Budget 2017 to move to triennial revaluations from 2022. Today I'm pleased to announce that we will bring forward the next revaluation to 2021 and move to triennial reviews from that date.

"We are the party of small business and the champions of the entrepreneur."

HM Treasury has also published a consultation on how it will introduce these more frequent valuations, with a self-assessment option and a formula option both offered as possible systems.

The consultation paper said: "Any new system must continue to provide a stable business rates base, be affordable to administer and be fair between ratepayers. And any changes to the system will need to be fiscally neutral."

The Treasury said a self-assessment system would give businesses "greater control" and make the business rate system more aligned to the rest of the British tax system but it said a formula system would be easier for most ratepayers and provide councils with more certainty.

Meanwhile the Treasury has also put forward two proposals for reforming the VAT registration threshold. 

The UK's VAT threshold is currently £85,000, making it the highest in the group of developed countries which form part of the Organisation for Economic Co-operation and Development and the highest in the European Union.

Germany's threshold is £15,600 and a report by the Office for Tax Simplification said there was evidence the high level of the threshold was having a distortionary impact on business growth and activity.

Three proposals were put forward to reform this system, such as gradual reliefs for businesses just above the threshold, allowing businesses to exceed the threshold by a set amount for one-off years and applying the threshold over a longer period of time.

During the Autumn Budget last year, Mr Hammond said he would publish a consultation on the taxation of trusts during 2018 to make the system "simpler, fairer, and more transparent" but this was not published during today's statement.