7 November 2019

The Treasury Select Committee published its report on the impact of business rates after an inquiry which was launched in February this year.  The NHF/NBF submitted calling for fundamental changes to business rates.  The report picked up on many of those points saying:

  • Business rates are going up faster than inflation and are growing as a proportion of the taxes paid by businesses.
  • The current differences between rates paid by high street shops compared to online businesses is unfair.
  • Although it benefits small salons, the business rates relief system is complicated and can change from year to year.
  • The Check Challenge Appeal system is not working so there is a backlog of 16,000 appeals at present.

The report called for the Government to prepare a consultation before the Spring Statement in 2020 to explore alternatives to the current system of business rates.  Options include:

  • A land value tax which would align how much businesses pay with the benefits they receive, paid by landowners rather than occupiers.  This could remove half a million small businesses from business rates altogether.
  • Online sales levy, for example adding on 2% to online sales of physical goods, with the money raised used to fund a 20% reduction in business rates for retailers.
  • Sales or turnover tax or a profits tax.
  • A single consolidated tax, combining business rates, corporation tax, Employers National Insurance and VAT.  Any business with turnover of less than £1m would pay a single sum.
  • A hybrid tax combining property-based tax and a tax on profitability.

Hilary Hall, NHF/NBF chief executive, commented, “We’re delighted that the Treasury Committee report supported the views on business rates which we put forward on behalf of our Members.  So far, no clear alternative to business rates has emerged so there are a lot of conflicting proposals and there are only sketchy details on how most of them would work in practice.  While different schemes may benefit salons, we will be carefully evaluating the options if a consultation goes ahead and we will be consulting with our Members.  It’s crucial that there are no unintended consequences from an alternative scheme which ends up being worse for salons than business rates already are.”