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Budget 2020: Treasury to review business rates

Budget 2020: Treasury to review business rates

HM Treasury is set to review the current business rates regime — the tax levied on firms based on their business property — in a bid to modernise the system.

New chancellor Rishi Sunak announced a "fundamental review" into the "long-term future" of the rates in his Budget speech today (March 11).

In supporting documents to the Budget HM Treasury said it hoped the review would reduce the overall burden on businesses, improve the current system and consider more fundamental changes.

It stated: "Business rates are less distortive than other taxes, easy to collect and hard to avoid.

"However, the government also recognises concerns about the impact of business rates on ratepayers, including on the high street, and the potential need to modernise our tax system."

The rates, which are levied against a business' property, raise about £25bn in England each year. Decisions on business rates are devolved to Scotland, Wales and Northern Ireland.

The Treasury's review will focus on four main areas: improvements that could be made from April 2021, reforms to the current system to make the tax more sustainable, the administration of the rates, and exploring possible alternatives.

It will also probe the role of business rates in funding local government, the practical challenges involved in possible reforms and the implications of any changes for the devolved administrations.

The review will not consider the overall level of funding for local government.

A call for evidence will be published in spring 2020 with the conclusions published by autumn this year.

Cyrique Bourbon, asset allocation strategist at Brown Shipley, said: "Clearly, there is a fundamental shift in consumption to online but the high costs associated with physical stores means that for many small businesses, this was not a level playing field."

imogen.tew@ft.com

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