25th Nov 2015 14:20
LONDON (Alliance News) - UK retailers face changes to the amount of property tax they have to pay after Chancellor of the Exchequer George Osborne revealed plans to give local authorities the power to set their own business rates.
In his annual Autumn Statement on Wednesday, Osborne said he will abolish the current uniform business rate, which is set at 49.3% of a non-domestic property's free-market rental value in England and 48.2% in Wales. Small businesses have a lower rate of 48.0% in England. London also has its own separate rate of 49.7%, and 48.4% for small businesses.
Instead, local councils will be allowed to set their own business rates and will keep 100% of the revenue raised to spend as they wish. Currently, half of the money goes back to Westminster.
UK retailers expressed concern at the time of Osborne's Summer Budget speech in July that the chancellor failed to confirm a reform to business rates, so Wednesday's announcement may be welcome news to some, although there is no guarantee that local councils will lower the rate of tax they charge below the current uniform business rate.
Speaking at the CBI annual conference earlier this month, Tesco PLC's Chief Executive Dave Lewis said that the current uniform business rate is "unsustainable" and needs "urgent reform".
Lewis noted that for every GBP1 paid in corporation tax, large retailers pay GBP2.31 in business rates, adding that Tesco's business rates bill has increased by well over 35% in the last five years, which he said is three times the Organisation for Economic Co-operation and Development average.
He added that business rates have hit the retail sector by GBP8 billion over the five years, and warned that jobs within the sector have had to be sacrificed under the "enormous pressure".
"Over the last five years property values have fallen, profits are down but business rates are up. Quietly but dramatically," Lewis said at the conference.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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