Proposal to Drop Small Business Rates Announced

Local council recommends linking business rates directly to turnover, making it fairer for small and mid-sized businesses trading on high street rather than online

The Local Government Association (LGA) has released a proposal to lower business rates for small and mid-sized firms who trade mainly on the high street.

Communicating on behalf of local councils, the LGA are concerned that small firms and businesses trading on the high street are being unfairly penalised by business rates; calling upon the government to explore linking rates to turnover and e-commerce to make rates fairer for businesses in local areas.

Currently small firms and independent traders can pay significantly more in rates than internet start-ups and e-commerce businesses, regardless of turnover.

Councils believe that expensive business rates for small firms is putting new companies off opening up physical shop fronts – currently one in seven shops are empty – and this needs to be addressed in order to “save England’s high street”.

The LGA also suggest that business rates should be controlled by local government – as of now councils are restricted in their abilities as central government sets the charge. The LGA believe that decisions on start-up leases and rate relief should be made by local authorities; and that 100% of business rates income, including growth, should be retained and distributed by local government.

Cllr David Sparks, chair of the LGA, commented on the proposals:

“We need a system of local business taxation which is fit for the 21st century, which supports the areas in which companies operate and which helps, rather than hinders, business and the growth of our economy.

“The idea that the local taxes paid by business should be based solely on the size of a building predates the English Civil War. In a world where business and retail is increasingly happening online, a fundamental rethink is clearly long overdue.”

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