Philip Hammond will use Monday’s Budget to cut business rates by a third for half a million SMEs.
The Chancellor is expected to say in the Budget that he has listened to pleas from the nation’s embattled high street by unveiling £900m in immediate business rates relief for 496,000 small retailers.
Retailers have long campaigned for reform of business rates, which are calculated based on the annual market rent value of a commercial property, and disproportionately affect bricks-and-mortar high street retailers as opposed to digital retailers located in out-of-town industrial parks.
A long-delayed revaluation of properties last year pushed up business rates across the country. Accountants EY calculate that business rates have risen by 15 per cent in the last seven years.
This has added to rising costs for SMEs already battered by what Federation of Small Business chairman Mike Cherry has called “a perfect storm” alongside rises in the National Living Wage and the imposition of the Apprenticeship Levy.
However, the Treasury has resisted wholesale change of the system, which raises around £30bn a year for the Exchequer. It has instead focused on providing business rates relief to smaller businesses, which it estimates has saved companies £10bn since 2016.
The £900m relief will apply to small retailers on premises with a rateable value of £51,000 or below. The fund will only apply to England, as the devolved authorities have responsibility for setting their own business rates. It remains unclear how long the relief will apply, but it is understood that 90 per cent of small English retailers will be eligible.
The FSB called the measures an “early Budget treat” for its members, though it said business rates relief should extend beyond retail to the hospitality and service sectors.
FSB national chairman Mike Cherry said: “In the lead up to the Budget, we’ve been urging the government to provide targeted support to struggling small firms on our high streets. This announcement shows the Chancellor has listened and this relief is a welcome step in getting the urgent help that all small businesses need. This fund will help keep high streets at the heart of our communities.
“Small firms are the lifeblood of our high street. They are under a huge amount of pressure, with current business rates bills adding to that ever-increasing strain. For far too long they have come up against an outdated and unfair rates system and it’s clear that change is needed.”
Source: SME Web