Labour Party pledges to scrap business rates

By Michelle Perrett

- Last updated on GMT

Bold move: Rachel Reeves has vowed to scrap business rates and review taxes (Credit:Chris McAndrew, CC BY 3.0)
Bold move: Rachel Reeves has vowed to scrap business rates and review taxes (Credit:Chris McAndrew, CC BY 3.0)

Related tags: Business rates, Alcoholic beverage, Beer, Public house

The Labour Party has pledged to cut and eventually scrap the business rates system and will replace it with a new system.

Speaking at the Labour Party conference, shadow chancellor Rachel Reeves said the party would shift the burden of business taxes to create a “level playing field”. She slammed the current system, which she believes punishes investment, entrepreneurs and the high street.  

The current business rates system has come under criticism from the pub trade because it is felt it is unfair to the sector, which it believes overpays.

Leading trade groups – the British Beer & Pub Association (BBPA), UKHospitality (UKH) and the British Institute of Innkeeping (BII) – have all called for business rates reform.​  

Rateable turnover

According to the BBPA, the pub sector pays 2.5% of all business rates, despite accounting for just 0.5% of rateable turnover. 

The current Government has launched reform of the business rates system, which proposes three yearly revaluations​ and the duty to notify the Valuation Office Agency of changes to the occupiers as well as changes to the current appeals system. 

Reeves said: “Our high street businesses do so much to enrich our lives and our communities, facing huge adversity in the past year. They are struggling right now, with a cliff-edge in rates relief coming up in March,” she said.

“The next Labour government will scrap business rates.”

She added that any Labour Government would carry out the biggest overhaul of business taxation to ensure that UK businesses can lead the pack. 

“And here is our guarantee: the system we replace it with will incentivise investment, feature more frequent revaluations and instant reductions in bills where property values fall, reward businesses that move into empty premises, encourage, not penalise, green improvements to businesses and no public services or local authorities will lose out from these changes,” she said. 

Grandstanding

However, John Webber, head of business rates at Colliers accused the Labour Party of ‘grandstanding’.

“While we are great advocates of business rates reform, the shadow chancellor’s suggestion to abolish the system altogether without any concrete means of raising £26bn of tax, smacks of playing to the gallery at the Labour Party conference,” he said. 

He points out that replacing the £26bn tax take by a “new, as yet undefined system” is too woolly a concept. 

Colliers' own view is that the current system must be radically reformed, but not thrown out altogether.

“Rates reliefs should be reformed, empty rates relief extended, plant and machinery clauses reformed to encourage investment. We need more frequent revaluations, so rates better reflect values and an overhaul of CCA (check, challenge and appeal), the disastrous appeal system,” he said.

“We agree we need to look at other means of shoring up the tax take – but declaring an abolition of the system altogether – a system that produces £26bn of revenue for the Treasury – is naïve. We should learn from other countries that have fairer and equitable business rates systems and have a sensible discussion about reform to create a rates system that properly reflects the needs and obligations of UK businesses in the 21st century.”

Related topics: Legislation

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