Labour calls for business rates relief in Hunt’s autumn statement
Labour has called for Jeremy Hunt to provide tax relief for small businesses in his autumn fiscal statement as firms stare down rates hikes in April.
Labour deputy leader Angela Rayner told City A.M. today that the chancellor “must” next week axe the planned inflation-linked increase to business rates, while calling for a complete tax overhaul for small-and-medium sized enterprises (SMEs).
British firms are facing a near £3bn annual hike in business rates in April if inflation stays above 10 per cent, according to Altus Group, in what business groups are calling an “existential threat”.
Commercial properties will have their rateable value updated in line with inflation next April – an increase that many SMEs are branding as unfairly onerous.
City A.M. understands the chancellor is looking at whether to change the formula to mute the tax hike.
Labour has said it would abolish business rates if elected and replace them with a system that taxes online companies without a large physical presence more heavily.
Rayner said: “They need to recognise that in order to have SMES investing in the economy they need to have confidence in the government and the government’s going to support them.
“We want to abolish [business rates] and reintroduce a rate that is fair and consistent, which recongises the difference between High Street businesses and those that are online.”
The Confederation for British Industry (CBI) is warning next April is a “cliff edge” for businesses and that many cannot stay viable with the planned tax hike.
It comes as the chancellor is preparing to raise £55-60bn in his autumn statement next week through a series of tax rises and spending cuts.
CBI policy director Matthew Fell this week said: “Without intervention, the eye-watering rises scheduled for April will present an existential threat for many businesses which communities depend on.”
Rishi Sunak reviewed business rates while he was chancellor in 2021, with the Treasury vowing to make the system “fairer and timelier”.
This resulted in more frequent evaluations of the rateable values of properties and a business rates discount in 2022-23 for small retail, hospitality and leisure businesses.
Business groups have called for online companies without bricks-and-mortar shop fronts to face an online sales tax in order to provide tax discounts to High Street shops.
A Treasury spokesperson said: “Our business rates review led to almost £7bn of support to reduce the burden of rates over the next five years and brought about reforms which will make the systsem fairer.
“This included freezing the multiplier in 2022-23 to put the brakes on bill increases, and almost £1.7 billion in support to the retail, hospitality and leisure sectors.”