The U.K. government is reviewing the way commercial premises are taxed in order to make the system fairer to smaller businesses.
Chief Secretary to the Treasury Danny Alexander says that the review aims to modernize the 30-year-old system in attempt to better reflect changes in property values. “Business rates are a considerable cost. The time has come for a radical review of this important tax. We want to ensure the business-rates system is fair, efficient and effective.”
The review will be concluded by the 2016 budget. Currently, the local taxes - known as business rates - are paid annually on 1.8 million properties across England.
The Conservative and Liberal Democrat coalition said in December it was looking to overhaul the current system as well as capping the tax. With elections due on May 7 and the final budget before the vote on Wednesday, Alexander’s Liberal Democrat Party is seeking to show it’s helping to inject fairness into to Tory policies.
The review of Treasury will examine how businesses use property and how other countries apply local business tax. Further details of the plans will be published on the Treasury’s website.
“The current system of business rates is outmoded, clunky and regressive and it’s holding back the high street,” John Cridland, director general of the Confederation of British Industry, said in a statement. “This review provides an opportunity to go much further and we’ll be making the case for removing the smallest firms from paying business rates completely, linking rates to CPI rather than RPI and introducing more frequent valuations.”
In its pre-budget report, the government pledged a 1 billion-pound ($1.5 billion) package to reduce the cost of business rates in 2015-2016, focusing on supporting smaller businesses. Starting next month, the tax discount it applies on retail properties with a taxable value of 50,000 pounds or less will increase, benefiting about 300,000 shops, pubs, and restaurants, and tax relief for small businesses will be extended for a further year through March 2016.
To conclude, before May elections in U.K. and budget approval the government is reviewing business tax system in favor of small firms. Certainly it benefits creation of new business or setting up subsidiary in England. At that MN Consulting will make all necessary support in realization of your entrepreneurial idea.
Anna Maximova, PhD in economics
(Adopted from Bloomberg business news)