Labour’s plan for small businesses
Under the Tory-led government
- Under David Cameron businesses have been hit by business rate rises of £1,500 on average.
- The Tory-led government stopped the revaluation of business rates which was due in England in 2015. This means small businesses have been stuck paying 2008 levels and do not reflect the lower property values as a result of the financial crisis.
- Labour would cut business rates for 1.5million small businesses, and then freeze them the following year.
- The move will be worth an average £450 over two years to 1.5 million businesses, including shops, pubs and hi-tech start-ups. Some firms will benefit by £2,000.
How are you going to pay for this?
The Tory-led government in April is cutting corporation tax from 21% to 20% for 80,000 large firms. We would not proceed with this cut and spend the money on 1.5 million small firms instead. This is a fully costed pledge.
We already have the lowest corporation tax in Europe, but also the most expensive property tax. It is why it makes no sense for the government to make it a priority to cut the tax which is already the most competitive but not help smaller firms with this big cost.
Isn’t more fundamental reform to the business rates system required?
Yes. We back the review into business rates that has been announced. There are problems in the system. For example, a factory investing in a new piece of equipment will find that their bill goes up the next year because the property is now worth more. This can be a disincentive to invest.
While we need a fundamental re-think of our corporate property tax system small business need urgent relief now. A cut and freeze, as we propose, will help.
What impact has the failure of the government to take forward the revaluation had in my local area?
Figures are not available on a constituency or local authority level as the re-evaluation never went ahead. However, the table on the next page shows the estimated drop in rateable value of businesses in three broad classes, retail, offices and industrial, on a regional basis. The three ‘bulk classes’, as they are known, account for the majority of hereditaments (properties on which business rates are levied).
The “percentage change” column is the amount the rateable value would have dropped by had the re-evaluation gone ahead (e.g. the amount of extra tax businesses are forced to pay).