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Press release
17 Nov 2022
|
London, GB
Business rates: immediate help for some but no online sales tax - Autumn Statement, Thursday 17 November 2022
Chris Sanger, EY’s Head of Tax Policy, comments the Chancellor’s Autumn Statement:
“One of the few areas that the Government chose to cut taxes was in business rates, where it moved to reduce the burden by £5bn next year. This will include assisting retail, hospitality and leisure businesses with a 75% cut, targeted at small businesses, freezing the inflationary increase in rates and limiting increases in rates from revaluation. This will be welcome news for those businesses.
“Deep in the Autumn Statement documentation was the Government’s decision to abandon further work on the prospect of an Online Sales Tax (OST), following business feedback that it would be complex to introduce and amidst worries that it could cause unintended distortions and unfair results. The OST was proposed as part of an effort to fund a reduction in business rates for physical retail stores and instead the Government has relied upon the revaluation in April next year, based on 2021 values. Following the revaluation, the total business rates paid by retail will fall by a fifth, while the rates paid by large distribution warehouses will increase by 27%.
“The effect of the revaluation may dampen down some of the calls for reform, but this doesn’t necessarily address the fundamental issues inherent in business rates. Many will still argue that this is a ‘colour-blind’ tax, being one that is paid whether profits are in the black or the red, and needs to be more closely linked to ability to pay rather than the rental cost of property.
“This may yet be an issue the Chancellor is forced to return to, like many of his predecessors.”
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