PUBS and small firms will benefit from a £435 million emergency relief package for those set to be hardest hit by business rate changes, but the Chancellor faced calls for urgent reform of the “out-of-date” tax.
The new measures will mean that 90 per cent of pubs will be given a £1,000 discount on their business rates this year, while firms losing small business rate relief will see their bill increases capped at £50 a month.
Philip Hammond also announced a £300m fund for local councils to provide “discretionary relief” to hard-pressed firms facing steep rate rises.
The measures come weeks after Scottish Finance Secretary Derek Mackay moved to cap business rate increases for the hospitality sector in response to widespread concern about the impact of a controversial revaluation.
Mr Mackay unveiled proposals for the new 12.5 per cent cap on bill rises for restaurants, pubs, hotels and cafes would also apply to office premises in Aberdeen and Aberdeenshire to reflect the impact of downturn in the North Sea economy.
A package of extra support for the renewables sector was also set out by Mr Mackay in the Holyrood chamber.
He has faced growing pressure to intervene to help businesses cope with the first revaluation of the rateable value of businesses since 2010 amid warnings many facing large increases could be forced to close or shed staff.
In England and Wales yesterday, pub groups and small businesses cheered the relief measures, but business bosses and experts urged the Government to carry out a “root-and-branch review” of business rates.
Mike Coupe, group chief executive at Sainsbury’s, said: “Business rates are an analogue tax, not fit for the digital age.
“We would ask the Government to carry out a root-and-branch review of business taxation to create a level playing field across all businesses, rather than penalise property-based companies,” he added.
Mr Hammond admitted there was scope to reform the revaluation process to make it “smoother and more frequent”.
He said the Government will set out its “preferred approach in due course” and consult on it before the next revaluation.
He also acknowledged the Government needed to find a “better way of taxing the digital part of the economy”, although no commitments were offered.
But he dismissed calls for business rates – the commercial equivalent of council tax – to be abolished, saying they raise £25 billion a year.
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