BRC business rates reform to boost expansion plans

In a week that has already been widely acknowledged as a positive one for the UK’s small businesses, further proposals have been put forward that could see SMEs celebrating sizeable tax cuts. In turn, it is a move that could have a substantial impact on acquisition opportunities for smaller companies.

Following the Queen's Speech on Wednesday (4 June), which we wrote about here, the British Retail Consortium (BRC) has now suggested to the Chancellor George Osborne that small businesses should be freed from paying business rates. If agreed, it could see 100,000 small British companies benefit from not having to pay the tax on non-domestic properties such as shops, offices, pubs and factories.

The proposal from the BRC would reportedly affect 1.14 million properties and could impact on the mergers and acquisitions market; if the financial burden attached to owning business premises is alleviated then there would be both more money and more incentive for small companies to expand onto new pastures. For example, retailers looking to open new shops or companies wanting a secondary office location could see barriers to expansion lowered if they are made exempt from the business rates tax.

The Telegraph reports: “Business rates will be worth an estimated £27 billion to the Treasury this year. Critics claim the tax has increased ahead of the economic recovery and is blocking businesses from investing in expansion plans.”

Specifically, the BRC wants businesses whose properties have a rateable value of less than £12,000 to be made exempt, something that would boost more than 100,000 small businesses. Moreover, there is a desire among British companies to see a fundamental reform of the system that would see business rates move in line with the state of the country’s economy.

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