The UK government has said the hospitality, retail and entertainment sectors, all hit hard during the pandemic, will receive a 50% discount on business rates for one year.
Business rates are charged on most non-domestic properties. In this case, pubs, concert halls, cinemas, restaurants, hotels, theaters and gymnasiums are all included.
Overall, this is a tax cut worth £ 1.78 billion ($ 2.4 billion), the largest annual drop in corporate rates in 30 years, outside of COVID-19 emergency relief.
In his announcement on the budget and spending review, Chancellor Rishi Sunak said it would be irresponsible to get rid of trade rates altogether as they raise £ 25bn for the economy.
But to make them fairer, they will be reassessed every three years and further investment relief will encourage investment in technologies like solar panels.
Qualifying properties will receive up to 50% off their bill, subject to a cap of £ 110,000 per business – more than double the relief announced before COVID-19 for fiscal year 2020-21.
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He added that this was done in accordance with recommendations from the Confederation of British Industry (CBI) and the British Retail Consortium.
“On corporate tariffs, the Chancellor has made real progress in making the system more acceptable to businesses in the short term,” said Tony Danker, CEO of the CBI.
“But the harsh truth is that wholesale reform to unlock investment has been rejected today. The government missed the opportunity to truly reform a business rate system that is shrinking the main streets and factories of Great. Brittany.”
Danker believes the government’s commitment to innovation will be a central cog in the UK’s prospects of becoming a leader in industries of the future. In order to be globally competitive, the government must stick to these goals in the years to come, he said.
“This budget alone will not seize the moment and transform the UK economy for a post-Brexit and post-COVID world. Businesses remain in a high tax, low productivity economy with concerns about inflation But the budget will have a positive impact on the economy and bring several changes that will be welcomed by UK businesses.
Last month, the CBI backed Labor plans to cut corporate rates if the party is elected.
Subject to the cap of £ 110,000 per business, the average convenience store with a taxable value of £ 28,500 will receive aid worth more than £ 7,000, or 50% of their rates for the year.
The average pub with a taxable value of £ 21,000 will receive support worth over £ 5,200, or 50% of its pricing liability for the year.
And the average cinema with a taxable value of £ 95,500 will receive support worth over £ 24,000, or 50% of its pricing liability for the year.
In a tweet, Sunak said the move was “a tax cut worth almost £ 1.7bn and with the small business rate relief, more than 90% of all those businesses will benefit from a discount of at least 50%. Together we are now cutting corporate rates by £ 7 billion. “
“We are taking steps to ease the burden of corporate tariffs and increase our main streets,” he said, adding that starting in 2023, each company will be able to make improvements to their properties and not pay any additional tariffs. for 12 months.
He also said: “Without action millions of businesses would see their tax bills increase next year due to inflation, so I decided that the multiplier increase planned for next year would be canceled. That’s a corporate tax cut worth £ 4.6 billion over the next five years. “
The government is also introducing new relief to support green technologies – until 2035, factories and machinery used on-site for renewable energy will be fully exempt from commercial tariffs.
In August, small businesses said UK trade rates were a major drag on investment in measures such as net zero environmental liabilities and employee welfare.
Mike Cherry, national president of the Federation of Small Businesses, said at the time: or install ventilation to promote the well-being of your staff, the assessment office agency will notify your local authority that you should pay more. expensive in professional rates.
Read more: Budget 2021: Sunak resets UK spending target for post-COVID economy
Earlier this month, it was revealed that the UK hotel sector had overtaken the rest of the economy for the first time in more than nine years in September, according to data from Lloyds Bank.
Jeavon Lolay, Head of Economics and Market Intelligence at Lloyds Bank Commercial Banking, said: “We are now firmly in a phase of economic recovery where big leaps in activity will not occur every month.
“As the UK economy continues to move closer to its pre-pandemic peak, logistical challenges, rising energy prices and uncertainty over the trajectory of the virus as winter approaches. are key risks. “
He believes that in the future, “policymakers will need to be cautious in order to safeguard the recovery, with important fiscal and monetary policy decisions to be taken in the weeks and months to come.”