Business

Budget 2017: Pubs see extra help in business rates revamp

Man pulling a pint Image copyright Getty Images

Pubs and small businesses will receive extra help with their business rates bill, the chancellor has announced.

The new measures mean that 90% of pubs in England will receive a discount while small firms set to lose their rate relief will see increases capped at £50 a month, the chancellor said.

A £300m fund for local councils to offer discretionary relief to the worst-hit firms was also announced.

But business groups said the system still needed overhauling.

Overall, the extra relief will cost the government £435m, Chancellor Philip Hammond said.

Ahead of the Budget, business had been lobbying hard over the issue. An update to business rates comes into effect in April and many firms - pubs and restaurants in particular - had complained that the sharp increases threatened their survival.

Business rates are based on a what is known as the "rateable value" of its property - that is a calculation based on the rental value of the space. For pubs, the latest measure applies to those with a "rateable value" of £100,000 for this year only.

The cap on small business set to lose their rate relief will apply for five years.


'The bigger picture still a problem'

Jane Antoniades runs a florist and gift shop in Whitstable. She says:

"Personally I feel huge relief but the bigger picture is that rates are still a problem for the High Street. There are four other places nearby who are not getting this relief and so are still getting hit by massive increases. If they close, that affects the High Street as a whole and me as well.

I was due to pay a 353% increase over the next five years. That has now been capped at £500 a year so that will be an increase of just under 40%.


Business bodies gave a lukewarm reaction.

"Measures that mitigate the short-term impact of business rate rises are little more than a sticking plaster," said the British Chambers of Commerce. "The radical changes needed to improve the broken business rates system will have to wait for another day."

'Timewasting'

Mike Cherry, chairman of the Federation of Small Businesses said the "new money is a direct and much-needed response to those facing astronomical hikes in their business rates".

But he added that the tax remained out of date and called for the creation of a simpler, fairer system.

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Media captionSpring Budget 2017: Shopkeepers give their reaction

And Jerry Schurder, head of business rates at the property consultancy Gerald Eve said the plan for another consultation into more frequent revaluations was "timewasting of the highest order".

The Association of Licensed Multiple Retailers, a body representing retailers in the eating and drinking sector, welcomed the move on pub rates, saying it would "safeguard investment and jobs".

The British Beer and Pub Association (BBPA) was pleased with the relief on rates, but said that the increases in beer duty - an extra 2p on a pint - was not good news.

"Beer tax has now risen by 43% in the past 10 years. This latest rise will mean 4,000 fewer jobs this year, mostly in pubs. Tax rises on all alcohol will add £125m to the cost base of pubs," said Brigid Simmonds, chief executive of the BBPA.

All alcohol duty will go up with the rate of inflation, as previously planned.


How are business rates calculated?

Business rates are in effect the commercial version of council tax, and are paid on the rental value of the space that businesses occupy. The amount depends of the size of the property and what it's used for.

This update to property values is two years behind schedule, making it a harder pill to swallow in areas where the price of real estate has been rising.

It is a devolved issue. Scotland and Wales have already announced changes to their systems.


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