Government to pocket extra £1bn from small business rates hike while giving US giant Amazon a tax cut
OUTRAGE has erupted after it was revealed the Government will pocket an extra £1 BILLION from a radical business rates shake-up this year.
Treasury officials have repeatedly claimed property revaluations will be “revenue-neutral” and there will be as many firms seeing a cuts as a rise when changes take effect.
But forecasts slipped out by the Department of Communities and Local Government revealed cash from the controversial tax will total £25.5 billion in 2017-2018 - up from £24.5 billion.
The figures emerged shortly after Treasury Secretary David Gauke slammed ratings agencies for “scaremongering” about the number of firms facing an eye-watering bill rise this April.
In comments that will infuriate some of Britain’s biggest high street brands, he said: “Far from the picture pained by scaremongering ratings agents, nearly three quarters of businesses will actually see no change, or even a fall, in their business rate bills.”
The Federation of Small Business said ex-Chancellor George Osborne had vowed last year that the business rate burden would fall by nearly £7 billion over the course of the Parliament.
FSB chief Mike Cherry stormed: “The business rates system is increasingly unfair and outdated, with many facing arbitrary surprised hikes in their bills.
“It would add salt to the wound if Ministers now do not deliver what they promised.”
The chaos stems from a re-evaluation of property values used as the benchmark for business rate bills.
The values haven’t been changed since 2010 so this year’s benchmark reflects huge changes in the commercial property market since the start of the decade.
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This has left many businesses in London and the South-East – as well as city centres across the UK – facing huge increases in their rate bill.
Meanwhile many shops in other parts of the country will benefit from a fall.
The Sun on Tuesday revealed Amazon will see a business rates cut because many of their mammoth warehouses are based away from town centres.
Britain’s biggest supermarkets – Tesco, Asda, Morrisons and Sainsbury’s - will also benefit from a reduction in rates for their warehouses and superstores.
But 17,000 pubs face hikes average 19 per cent.
It has also emerged that NHS Trusts and GP surgeries will face a £635 million rise over the next five years.
Universities face a £500 million increase over the rest of the decade.
Government insiders have insisted the reason for the extra £1 billion lay behind an increase in the number of businesses operating in the UK – rather than a higher tax burden.
In his statement, Mr Gauke said: “The fact is that the generous reliefs we are introducing mean that 600,000 small businesses are paying no business rates at all – something we’re making permanent so they never pay these bills again.”
The Treasury added the biggest rate falls on the high streets are clustered in areas that have struggled in recent years.
But British Retail Consortium chief Helen Dickinson stormed: “The business rates system is no longer fit for purpose in the 21st century.
“At a time when retail is being re-imagined and customers seek more engaging experiences, business rates are a disincentive to innovate and invest in physical space.”