3 June 2014

The UK’s system of business rates needs to be fundamentally reformed, NHBF salons have said, with more than eight out of 10 in a poll calling for the current property-based tax to be scrapped in favour of one based on sales. 

A poll of members has found 83 per cent disagree with the government’s position that rates should continue to be a tax based on the physical value of a shop or other commercial property.  They argued it was unfair that online retailers without physical premises do not have to pay rates, while “bricks and mortar” business such as hairdressers do.

As one member explained: “The current system is now outdated; retailers looking to battle with online competitors are at a huge disadvantage by having to pay overrated taxes on occupying a property. No wonder town high streets struggle, and as a result they are shrinking.” 

Many argued that alternatives should be explored, such as a tax based on sales or turnover.  But these have been ruled out in the government’s discussion paper about the future of business rates, which ministers have said will be reformed in England after April 2017.

The NHBF is also calling on the government to do more to promote schemes such as small business rates relief and retail rates relief, which can be hugely beneficial to small businesses, but which busy entrepreneurs often simply do not realise exist.

Since April retail businesses with a rateable value of up to £50,000, including ‘hair and beauty services’, have been able to receive a £1,000 discount on their business rates for the next two years, under plans announced back in December by the Chancellor, George Osborne.

NHBF President Paul Curry said:

This scheme and others, such as the new Employment Allowance, which offers up to £2,000 off national insurance contributions, can make a big difference and are, in fact, a genuine good news story for the government.

 

“But the feedback we’re getting from members is that rates relief schemes have not been well advertised or promoted. As a result many small businesses are potentially missing out,” he added.