Business rate reform increasingly likely
The UK Government could be set to scrap commercial property tax, following a call from retailers for complete reform and David Cameron laying the foundations for a revision of business rates. There was much heated discussion in 2013 surrounding the matter, and the recent advances will hopefully see an upturn in retailers’ fortunes as the economy continues its recovery.
Tax disparity between on and offline commerce
At a Federation of Small Business conference, Cameron acknowledged that a tax imbalance between high street retailers and online businesses exists. He commented that reform would not be easy because “rates raise about £24bn and I don’t think there is any one solution that is going to make everybody happy”. Those with a physical presence on Britain’s struggling high streets currently face a tax on commercial properties, but with the online marketplace taking over the current rates system has become outdated. The existing structure switches many businesses off from the idea of investing in property, which could harm the chances of UK high-streets experiencing a much needed revival.
Cuts and capital injection to aid economies
The government has already taken measures to boost local economies and retail areas, with a £415million package of business rate cuts and investment announced in January 2014. This includes a £1000 business rate reduction for around 300,000 SMEs. However, retailers have called for further adjustments, and the Coalition is expected to release a discussion paper on the matter in spring 2014.
Reform as a catalyst for growth
With rate reform, firms will experience lower barriers to commercial property procurement, which has the knock-on effect of boosting employment in the local area. Asset management and the accompanying risk management obstacles will remain, but an easing of pressure on cash flow will be a welcome arrival when businesses need it the most.