The UK’s largest business group has written to the Government to highlight steps that should be taken to protect small businesses, spur economic recovery, and secure green investment as part of a business rates review that is set to move forward in the autumn.

In a letter to ministers, FSB national chair Mike Cherry describes the tax as “regressive and outdated”, and encourages policymakers to:

  • Stop penalising investments aimed at improving sustainability and working conditions for employees, such as solar panels, insulation, ventilation, recycling facilities and bike sheds – such additions typically cause a property’s value, and by extension its rates bill, to increase.
  • Exempt all childcare providers from business rates to bring support across England in line with that provided in Wales and Scotland.
  • Aid high street recovery by accelerating reforms that have seen some of the smallest businesses removed from the rates system by increasing the threshold for 100% small business rates relief to £25k.
  • Remove a quirk in the system that causes a firm operating across two premises to be charged rates even if its total valuation should see it qualify for relief.
  • Ensure that efforts, welcomed by the small business community, to conduct more frequent revaluations for business rates purposes are light-touch and transparent, and do not prevent valid appeals.

Cherry said: “The Government is absolutely right to overhaul a business rates system which often lets online retailers operating from remote warehouses off the hook whilst punishing small businesses that serve as community hubs.

“This is a levy that hurts small firms trying to do the right thing: if you put solar panels on the roof to aid your transition to net zero, or install ventilation to support the wellbeing of your staff, the Valuation Office Agency will advise your local authority that you should be paying more in business rates. 

“As we look to aid the small business community’s transition to net zero, and employee safety and wellbeing as we come out from the pandemic, this simply cannot be the right approach to taxation.

“Instead, we should be aiming to take more small firms out of the system altogether, not least our childcare providers, who have done so much to support families throughout an incredibly tough 18 months and are finding that making ends meet is an increasingly precarious business.

“Renewed efforts to ensure that rates bills are based on fair valuations are welcome and much needed – the more we can move to rolling up-to-date valuations, the more we can ensure this is a fair system fit for the digital age.”

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