Liz Truss plan for business rates changes 'falls far short of what is needed', likely next PM is warned

It has been reported by Bloomberg that Ms Truss is considering raising the threshold for relief from business rates raised from the current rateable value of £15,000 to £25,000 – a move that her team believe would help around 200,000 businesses. The idea has been described as a “win-win” by the Federation of Small Businesses.

But Jerry Schurder, Business Rates Policy Lead at real estate advisory business Gerald Eve, which has offices in Leeds, said that figure appears to be a considerable over-estimate and questioned whether the potential support will go far enough.

Mr Schurder said: “Any cut to business rates is of course welcome, but this proposal falls far short of what is needed by businesses to help them weather the cost-of-living crisis. Without fundamental changes to the way Small Business Rates Relief (SBRR) operates, only about half of the mooted 200,000 businesses would actually benefit from relief – with many more small businesses receiving no relief at all.

“This is because under the current system of SBRR only businesses with a single property in England qualify for relief. So small businesses which occupy two or more properties currently pay full rates and this would continue even if the threshold for SBRR is increased.

"There are presently 1.43 million properties in England with rateable valuables below £15,000 but only around 750,000 currently receive SBRR – the remainder being ineligible under the ‘only one property in England’ rule. By raising the threshold to £25,000 you include more businesses, but without changes to the eligibility criteria only those with a single property will benefit, leaving out operators with multiple sites.

“Moreover, an increase in the threshold to just £25,000 means many genuine SMEs that occupy properties with higher rateables values would miss out. Businesses that occupy larger properties, including restaurants and pubs, will be in need of support also. There are 13,087 smaller pubs and restaurants in England with rateable values between £25,000 and £50,000 who would get no rates support if the scheme was limited to a £25,000 threshold as suggested.

“Meanwhile, for those businesses that do qualify for the relief, the actual savings may be relatively insignificant when compared to their rising costs. Under the proposal, the maximum rates cut for a business with a rateable value of £25,000 is £12,475. But many small businesses are facing substantially larger energy bill increases. The next prime minister will have to go much further than this proposal if we are to prevent a tsunami of small business failures this winter.”