George Osborne used his last Autumn Statement before the General Election to call for business groups to engage with a review of the structure of business rates – to report by the 2016 Budget. He also said he would continue to cap inflation-linked increases in business rates at 2% until 2016.
Business rates are charged on commercial premises such as restaurants and shops. They are calculated based on a rateable value worked out by the Valuation Office Agency. But owners of small businesses complain that the bills can be crippling, especially with living costs rising and competition from out-of-town shopping centres driving customers away. Mr Osborne unveiled a range of measures to alleviate the much-hated business tax.
The interim findings of a review into business rates will be released in December 2015. The Chancellor said a £1,000 discount on rates for around 300,000 high street shops, pubs and cafes introduced last year, would be increased to £1,500 next year. He also announced that small business rate relief will be extended to mean those whose premises is given a rateable value of below £6,000 pay no business rates. He said this will help 380,000 firms.
The Chancellor believes that this means a third of a million firms pay no rates. The changes were announced ahead of ‘Small Business Saturday’ where shoppers were urged to visit their local, independent retailers for their Christmas shopping. However, amid the volume of pre-Christmas promotional hype and media noise being created by larger retailers and shopping malls, this may have gone unnoticed by many shoppers.
The Chancellor also announced the extension to the Funding for Lending Scheme, now solely aimed at small businesses and said the seven day current account switching service would also include small firms. However, one observer commented that the measures announced amounted to little more than a drop in the ocean, while the scheme accounts for less than two per cent of all lending to small firms.
The Chancellor’s package of support to boost lending to small businesses also includes £400 million to extend Enterprise Capital Funds – Government-backed venture capital funds investing in small and medium-sized enterprises – and £500 million of bank lending to be guaranteed under the Enterprise Finance Guarantee scheme. Whilst these are also judged by observers to be worthwhile initiatives, for many small enterprises they are as yet untried and untested.