The Government says the introduction of legislation in Parliament this week ‘begins the delivery of its promise to reform business rates’, as set out in Labour’s manifesto.
The tax cut will be funded by a tax rise for the top one percent of high-value properties, such as large warehouses used by online giants.
“For too long the business rates system has been working against our high streets,” says James Murray, Exchequer Secretary to the Treasury.
“[This] 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.”
In last month’s Budget, Chancellor Rachel Reeves confirmed that business rates support for the hospitality sector would be extended for a further a year to plug the gap until the new system is unveiled.
However, the level of support will be slashed from 75% to 40%, capped at £110,000.
Figures supplied by commercial real estate intelligence firm Altus Group show that the reduction in rates support will mean an average 140% rise in business rates bills for more than 250,000 high street premises in England next year.
Restaurants will see their average bill rising from £5,051 to £12,122, according to the group, while the average bill for pubs will increase from £3,938 to £9,451.
Speaking to MCA, Restaurant’s sister site, this week, Simon Dodd, chief executive of Young’s, said his one ask of the Government is ‘to really sort business rate reform out’.
He said: “They (the Government) are consulting now but if we could have certainty of what rate reform looks like and the impact on the whole sector, not just people that have one pub […] that will help us balance the books and that will help the sector immensely.
“Our business rates bill is a large number. Bricks and mortar have carried a lot of the burden on business rate for many years […] we just want fairness. So, if we can get clarity on exactly what the business rate reform looks like for hospitality and the legislation, that would be a real help.”
