Following his pre-budget Autumn Statement, Mr Osborne pledged to extend the Government’s Small Business Rate Relief through increasing the current discount of £1,000 by 50% to £1,500 for 2016.
This discount applies to small businesses that have just one property with a rateable value up to £50,000.
He also promised to organise a review into the business rates system and cap the inflation-linked increase in business rates at 2%.
One of the main driving points behind this discount and the pending review into business rates is to support the high street in competing fairly with online companies.
This discount is expected to provide in the region of £1billion in rates relief for high street retailers and affect around 500,000 firms across the UK.
‘Fundamental reform’ of business rates needed
John Allan, National Chairman of the Federation of Small Businesses (FSB), has welcomed the Chancellor’s further reduction in business rates. He explained how many of the FSB members had cited business rates as their third biggest cost after rent and wages.
However, despite this reduction, he believes the system as a whole is in urgent need of a reform.
“This tax is poorly targeted and not based on ability to pay,” he said. “It’s complicated, opaque, regressive and unresponsive to changes in economic conditions.”
Mr Allan described the current business rates system, which has been in place since 1988, as ‘out of date’ and was adamant that change was needed.
He said: “All businesses will be grateful for this review, but let’s be absolutely clear on what businesses want – fundamental reform of the business rate system.”