Labour’s proposal to abolish business rates has received criticism from property specialist Colliers. The party’s promise to introduce a fairer system for the 21st century has gained traction amongst UK voters, but experts at Colliers argue that reform is necessary rather than complete abolition.
Colliers has raised concerns about the lack of clarity surrounding Labour’s proposed replacement system. While the party has hinted at a valuation process based on a combination of land and rental value, the specifics have not been disclosed. However, Colliers does support Labour’s plan to extend small business rates relief for premises with rateable values up to £25,000, as well as the extension of the 50% relief up to £110,000 from April 2023.
John Webber, Head of Business Rates at Colliers, emphasizes the importance of significant reform to the current system but opposes total abolition or the implementation of a Land Value tax. Colliers praises Labour’s consideration of more frequent revaluations, instant reductions in bills when property values decrease, and a closer alignment of rates with economic changes. The party’s focus on rewarding businesses occupying empty premises and encouraging green improvements is also commended.
Webber does express concerns about potentially shifting the tax responsibility to landlords instead of the businesses benefitting from the services funded by business rates. He also worries that the proposed new system could be as complex as the current one, albeit in a different way.
Business rates have been in place for centuries and contribute £26 billion net to the exchequer. Physical retailers have long criticized the system, arguing that it unfairly penalizes them compared to e-commerce businesses. Previous adjustments to the system have failed to address retailers’ grievances.
The different approach taken by Labour, in considering the frustrations expressed by businesses, sets them apart from previous Conservative and Liberal Democrat governments. However, the challenge lies in creating a replacement system that addresses these concerns while remaining simple and fair.
Useful links:
– Key Issues Brief on Business Rates by the British Retail Consortium
– Financial Times article on Labour’s business rates proposal
