Chancellor George Osborne issued his Autumn Statement earlier today, revising economic growth forecasts upwards for this and the next four years, and doubling the export finance capacity available to British businesses to £50b.
The biggest news for businesses was that business rates in England and Wales will be capped at 2%, and those moving into properties vacant for at least 18 months will see their rates halved. The Chancellor also announced a £1000 discount in business rates for small shops and pubs for the next two years.
Responding to the Chancellor’s pledge that business rates reform was “on the agenda for the 2017 revaluation,” Liz Peace, chief executive of the British Property Federation (BPF), says: “We are delighted that the Chancellor appears to have heeded our calls – and those other business groups – of to commit to a review of business rates, as well as taking short-term action to mitigate the harm that continues to be caused by this archaic property tax.
“However, simply tinkering around the edges of the system will not be enough – the business rates regime remains one of the greatest barriers to investment in the built environment, and is fundamentally unfit for the 21st century.
“Action to support the re-use of empty shops is particularly welcome. Empty properties blight our high streets and town centres, and we would urge Government to think further about reforms to the business rates regime that would allow property owners to invest further in these properties.”
While the property industry has expressed concern over plans to charge capital gains tax on foreign residential investors from April 2015, it has welcomed the Chancellor’s decision to at least consult on the proposals before their introduction. The BPF had warned HM Treasury that the tax hike would raise little money and risked undermining the UK’s status as a country that was ‘open for business’ unless introduced in a sensible and measured way.
“If the Government seriously wishes to make housing more affordable then it must encourage investors to deliver more homes, not fewer,” says Liz. “The positive benefit that overseas investment brings to the UK is therefore vital, and Government should do all it can to nurture it. This measure will raise little more than £40m a year, and yet may do far greater damage to institutional investment in the private rented sector, and to housing supply more generally.
“Nevertheless, we are pleased that Government has heeded our warnings and has committed to consult on these proposals. Hopefully we will avoid last year’s debacle, when the 15% SDLT rate aimed at purchasers of high-end property was mistakenly applied to genuine property investment businesses, with no prior warning.”
Regarding the outlook for retail, Helen Dickinson, British Retail Consortium (BRC) director general, comments: “The Chancellor has recognised that businesses are suffering and is right to listen to retailers’ concerns on business rates. The BRC has campaigned for a 2% cap, and reform of the business rates system, and it is extremely welcome to hear it announced.
“The Chancellor has recognised the consensus that exists that the business rates system should be reviewed. The BRC is already conducting a detailed study into options to improve the business rates system with tax experts EY and look forward to playing a full part in the discussions that will take place with Government on the reform of the system.”
“With the additional measures also announced today on National Insurance, retailers will be encouraged to do even more to support the aspirations of young people across the country. 40% of all jobs for those under 20 are in retail, and this will help retailers provide secure career opportunities for young people.”
See the BBC’s summary of key Autumn Budget points here.