CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. UK Companies Hail Business Rates 'Revolution'

UK Companies Hail Business Rates 'Revolution'

by Robert Lee,, London

06 October 2015

UK Chancellor George Osborne has announced that, by 2020, local authorities in England will be able to retain all of the money raised under the business rates (property tax) system.

In a speech to the Conservative Party's annual conference, Osborne said: "I am embarking on the biggest transfer of power to our local government in living memory. We're going to allow local government to keep the rates they collect from businesses. That's right, all GBP26bn (USD39.4bn) of business rates will be kept by councils instead of being sent up to Whitehall."

Since 1990, local business rates have been set by central government at a uniform national rate. Rates are collected locally and transferred to central government, to be distributed back to local areas in the form of a grant. Since 2013, local councils have been able to retain 50 percent of the proceeds of rates. Control over business rates in Scotland, Wales, and Northern Ireland is devolved to the national administrations in those parts of the UK.

As part of Osborne's so-called "devolution revolution," the Government will also abolish the Uniform Business Rate in England and give local authorities the power to cut business rates. The core grant system will be phased out. Areas with city-wide elected mayors will be given the power to increase rates.

Osborne said: "Any local area will be able to cut business rates as much as they like, to win new jobs and generate wealth. It's up to them to judge whether they can afford it. It's called having power and taking responsibility. And for those big cities with elected mayors, like London, Manchester, and now Sheffield, I will go even further. Provided they have the support of the local business community, these mayors will be able to add a premium to the rates to pay for new infrastructure and build for their cities' future."

Simon Walker, Director General of the Institute of Directors (IoD), welcomed the Chancellor's announcement. He commented: "Businesses are excited about the prospects for devolution, and the promise to devolve business rates will give local authorities a greater stake in the success of their local economy. Businesses have been clear that they want enterprise to be put at the heart of the devolution agenda, and the Chancellor appears to be doing just that. More than 60 percent of IoD members back local politicians being given the power to set business rates."

"We hope this new deal will pave the way for councils to use these new powers to attract businesses and regenerate high-streets. While businesses support devolution, they will not stand for local politicians using it as an excuse to hike taxes. More than half of IoD members were concerned devolution would lead to higher taxes. Councils must avoid the temptation to increase rates to raise revenues, and instead compete to attract businesses to the area, which will bring jobs and wealth."

TAGS: tax | investment | business | property tax | United Kingdom | tax rates | tax reform | regulation | trade association | trade | Scotland

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »