The TaxPayers' Alliance wants business rates to be reformed

Alys Key
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Astronomical business rate hikes show that the system needs reform, says the TaxPayers' Alliance (Source: Getty)

The TaxPayers' Alliance has suggested that business rates are a “bad tax” and could be replaced altogether.

The campaign group proposed several reforms to the current system including automating revaluations annually to avoid so-called “cliff edges” when business rates suddenly jump.

Today's recommendations come as a result of the first revaluation of business rates since 2010. The revalued rates, which are tied to a property's rental value, will cause drastic changes to the tax bills of many businesses. Rates for most London businesses are set to soar once the change comes into effect on 1 April.

The TaxPayers' Alliance said it was time to review the entire system, and to consider replacing it completely with a land value tax. Short-term suggestions for reform included making more reliefs available to ratepayers, lengthening transitional arrangements, and reducing the multiplier rate.

Several businesses have spoken out against the system, which they argue disadvantages companies with a greater bricks-and-mortar presence and favours online giants.

The alliance agreed that there is discrimination between sectors, citing the exemption for agricultural land buildings as another example of unfair disparity. It said some features of the current system were nonsensical, such as the distinction between developed and undeveloped land, which sometimes makes it cheaper for a landowner to demolish properties for which they are unable to find tenants.

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