An examination of current business rates, which have been in place since 1988, has been launched.
Findings for the ‘radical’ review are scheduled to be in time for the 2016 Budget.
‘The review will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how we could modernise the system so it better reflects changes in the value of property,’ the Treasury said.
The intention to review business rates was first announced in December’s Autumn Statement.
Chief Secretary to the Treasury, Danny Alexander, claimed that the ‘time has come for a radical review’ and that the government wanted to ‘ensure the business rates system is fair, efficient and effective.’
Mr Alexander also mentioned that the ‘worlds of commerce and industry have changed beyond recognition’ since the creation of the business rates system 30 years ago.
The review comes in the wake of yet more ‘disappearing’ high street shops that have faced fierce competition from online stores and rapidly changing consumer habits.
The current system has drawn widespread criticism due to rates being based on the shop’s value, as opposed to the turnover of the business. This has been a major issue for many small businesses.
‘They are extremely high.’ Emma Gray, owner of craft and gift emporium Bird Cage, told BusinessesForSale. ‘As a start-up business it’s the one cost that serves us little and is the most crippling financially.'
‘There must be a fairer way of managing the rates for all businesses but with a particular emphasis on small start-up businesses.’
Angela Connor, owner of knitting and sewing boutique The Creative Sanctuary, believes that ‘business rates [should be] based on profits rather than what the building or area is worth.’
‘I think more businesses would survive and grow to employ local people if this were possible,’ she said.
Currently, business rates are determined by the rental value of the property used by a business. Valuations are still dependent upon 2008 property prices due to the postponing of last year’s scheduled revaluation.
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