FSB urges government to “take action on business rates” to save small high street firms

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The Federation of Small Businesses (FSB) is urging the government to overhaul the UK’s current business rates system, declaring it “not for purpose” and “hugely damaging” to thousands of firms.

The association says the 75 per cent rates relief discount for the retail, hospitality and leisure sectors should be extended beyond the April 2024 cut-off to help small businesses survive next year. Meanwhile, it is also calling for an increase in the threshold for Small Business Rates Relief (SBRR) from £12,000 to “at least £25,000”, removing more than 250,000 small businesses from the system altogether.

Retailers could be in for an even bigger hike in April as rates are also set to rise with September’s headline rate of inflation, which could add an additional 6 per cent to bills next year.

FSB national chair Martin McTague comments: “Government needs to bring about a sea change when it comes to business rates. It’s long been known that the system is not fit for purpose and needs an urgent overhaul. Small firms have taken on huge cost burdens in recent times and the chancellor has an opportunity here to take action on business rates, while enabling small businesses to grow.

“For many small businesses on the high street and town centres, the current relief is a lifeline. In April this is due to end, creating a cliff edge that will be hugely damaging to thousands of businesses. Ensuring the relief is maintained for those businesses that need it most will be key to their survival.”

FSB also warns that the Non-Domestic Rating Bill needs to be more ambitious to make it easier for businesses to invest and improve by extending or upgrading their property.

Current proposals within the Bill ensure businesses in England making qualifying building improvements will not face higher business rates bills for 12 months. However, the FSB believes Improvement Relief should be extended to three years.

McTague adds: “While the business rates bill continues to work its way through the House of Lords this month, there’s a chance to make a real difference to ambitious small firms keen on investing in their properties, by extending Investment Relief to three years. For the cleaning supplies firm that wants to invest in new manufacturing space to take on bigger contracts, or the pub that has ambitions of serving more punters – this would be hugely beneficial. These small firms should not be stifled by the looming threat of higher business rates bills as a consequence of investment.”

In last year’s Autumn Statement the government announced a package of tax cuts worth £13.6 billion over the next five years, which included measures to support business rates costs. Chancellor Jeremy Hunt has announced that he will present the Autumn Statement 2023 to Parliament on Wednesday 22 November.