Budget – impact of business rates
The long-delayed revaluation of business rates, which will be implemented in April 2017, will severely damage thousands of London companies, driving many out of business.
Business costs are set to rise even further through the introduction of the Apprenticeship Levy and the increase in the National Living Wage, as well as the impact of the depreciation of the pound. This all comes at a time of increasing business uncertainty as the Government invokes Article 50.
While we appreciate the small changes in the proposed transitional relief scheme, many London businesses will still be hit by increases of over 50% this year alone, once various supplements are added, on what for those in hospitality, retail and related businesses is by far the largest tax they have to pay. And for many these considerable increases will continue each year.
The negative impact on the performance of London’s businesses, not least its hotels, bars, restaurants, shops, theatres and clubs will damage London’s high streets as well as our city’s attractiveness as a destination for international visitors. With permitted development rights leading to many commercial properties being converted to housing, the collapse of businesses is leading to long-term loss of commercial space and further reductions of the business rates base. When London’s economy thrives, the benefits are felt far beyond the capital. Likewise, when London’s economy struggles, this has a knock-on effect on employment and connected businesses in other towns and cities, as well as national tax income.
We ask you to explore, in the short term, measures to mitigate the impact of these rises, particularly by looking positively at policies and schemes that will enable businesses to create more income, such as local investment through TIF schemes.
In the longer term, we urge the Government to commit to a review of business taxes, including business rates, to ensure that we have a system that best supports economic growth and produces a high tax take in our post-Brexit economy.
The emerging Industrial Strategy, the Mayor’s London Finance Commission report, the changes in modern retailing and other businesses, the disquiet across the whole of the country at the impact of the latest revaluation, and the need to be ready for Brexit all suggest that a review of business taxes would be widely welcomed.
We urge you to act now to help London’s and Britain’s businesses.