Hammond offering crumbs from the taxman’s table?
Some political pundits believe Philip Hammond is poised to offer a little salve to businesses in this month’s budget by not raising business rates by the maximum allowed next April.
There has been intense lobbying behind the scenes over recent weeks and, according to The Times, the Chancellor is now signalling he is ready to offer an olive branch.
With September’s Retail Prices Index (RPI) figure recently announced at 3.9%, this has far-reaching implications for any owner or occupier paying Business Rates.
The RPI is important to business rates as it is used annually to increase the multiplier, by which non- domestic rates are calculated each year.
This will be the penultimate year we see the RPI figure used for this purpose – as from 1 April 2020 the Government is moving to the Consumer Price Index (CPI) figure as the yardstick for future increases to the multiplier.
However, senior government sources now say Hammond is poised to use the lower CPI, which stands at 3%, for the 2018/19 calculations.
The Chancellor was apparently shocked by negative reaction to his speech at the Conservative Party conference and is now trying to prove he is listening.
Small businesses, in particular, are calling on the Government to “sort out” businesses rates, some calling it a “living nightmare”. The Federation of Small Businesses (FSB) is asking for a raft of measures to reduce the tax burden on SMEs including more frequent revaluations and an end to the so-called “Staircase Tax”.
Whilst Hammond will not want to be seen performing any major policy U-turns after being slapped down by May in the past on key budget announcements, the switch from RPI to CPI calculations for 2018/19 could be just enough crumbs from the taxman’s table to keep business rates from becoming a major issue for the Government in the short term.
With September’s Retail Prices Index figure recently announced at 3.9%, this will have far-reaching implications for owners and occupiers paying business rates.
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