The first of two budgets due to come in 2020, covered both big borrowing and spending as well as the recent novel coronavirus outbreak.
Coronavirus is adding to the woes of small to medium-sized businesses, especially those on the High Street. The new Chancellor has announced additional measures in today’s Budget to try to assist businesses in the retail, hospitality and leisure sectors through an increasingly difficult period.
The business rates retail discount for properties with a rateable value below £51,000 in England available for one year from 1 April 2020 will now increase from one third to 100% (instead of 50%). It will be expanded to include hospitality and leisure businesses, at an additional cost of £270 million in the next tax year and £15 million in 2021-22.
The business rates discount for pubs with a rateable value below £100,000 in England available one year from 1 April 2020 will be increased to £5,000 (instead of £1,000) at an additional cost of £20 million next tax year. It is interesting to note though that though this will help small firms, there’s no relief for big firms and chains who pay ~70% of the retail rates bill.
At the same time, as many continue to call for more radical changes, the terms of reference for the government’s fundamental review of business rates (which will be released at the next Budget in the Autumn), are published alongside today’s Budget. The work of the review will include looking at:
- reforms to the current business rates system to make it more sustainable
- how to improve administration of the tax (including valuation and appeals) and;
- possible alternatives to business rates, such as a land valuation tax.
A call for evidence will be published in the spring.
Also in line with the recommendations in the First Report of Session of 2019-20 of the recent Treasury Committee enquiry, the government will invest an additional £11.5 million in the VOA in 2020-21 to support the modernisation of VOA systems and processes, to increase efficiency and improve customer service in the future.
There’s no doubt that the message from Rishi Sunak is support for businesses. However, the need for these measure has been evident for a number of years, and though it seems the outbreak of coronavirus has finally pushed these measures over the line, only time will tell if it’s enough of a relief for high street businesses, especially as coronavirus threatens to reduce footfall and revenue.
The Budget supports the government’s ambition for a fair and sustainable tax system that … creates an environment for business to succeed.