Wednesday, November 20, 2024

Government promises permanent cut to high street business rates

High street businesses across the UK will benefit from permanent cuts to business rates for retail, hospitality and leisure properties for the first time from 2026, following the introduction of legislation in Parliament.

The tax cut will be funded by a tax rise for the very largest business properties, such as online sales warehouses.

Until then, 250,000 retail, hospitality and leisure properties will receive 40% relief off their business rates bills up to £110,000 per business to help smooth the transition to the new system. This support is alongside the Budget announcement to freeze the small business multiplier, together with Small Business Rates Relief protecting over a million properties from inflationary increases. Taken together, this is a package worth over £1.6 billion in 2025-26.

To further support retailers, the government is also introducing legislation to increase the Employment Allowance from £5,000 to £10,500, meaning 865,000 employers will not pay employer national insurance next year.

James Murray, Exchequer Secretary to the Treasury, saidt: “For too long the business rates system has been working against our high streets.

“Today is a major step towards our new system that will support retail, hospitality and leisure businesses on our high streets to succeed. This Bill paves the way for a permanent cut to their tax rate, helping to level the playing field between them and online and out-of-town businesses.”

The government also plans to increase the Employment Allowance – discounting National Insurance bills – from £5,000 to £10,500 from April next year.

The increase to the Employment Allowance will mean that 865,000 employers will not pay any employer National Insurance next year, and 250,000 employers will pay less National Insurance than they are now.

It will allow firms to employ up to four National Living Wage workers full time without paying employer National Insurance on their wages.

The eligibility of the allowance will also be expanded to include all eligible employers, rather than just those with a wage bill of less that £100,000 a year.

Craig Beaumont, Federation of Small Businesses Executive Director, said: “We are pleased to see James Murray and the whole Treasury team take this important step forward – legislating for the significant increase to the Employment Allowance which FSB strongly championed, to protect smaller businesses with employment costs. But also taking a decisive step forward on business rates reform.

“For far too long, permanent business rates reform has been put into the ‘too difficult’ box. It is extremely encouraging on rates to see Ministers standing up for small firms in retail and hospitality and taking long-term action necessary to the future of our high streets – we look forward to continuing to work in partnership with the new Government to make sure no small businesses whatsoever are blocked from achieving their ambitions by a rates system that has not simply not kept pace with the needs of a modern economy.

“This follows important action announced by the Business Secretary to tackle the scourge of late payments and to take forward an Industrial Strategy to unblock the supply side barriers holding small firms back from their full potential.”

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