What we need above all is to transform rates from an all-or-nothing system, staggered with cliff-edges, to a fair, progressive tax system – closer in style to the banding of income taxes. We should also include a zero band, cutting the need for separate reliefs for small properties which add to the complexity. And we need to make the entire valuation process clearer and more closely and fairly tied to economic cycles.
That means the Valuation Office Agency (VOA) publishing the reasons for valuation changes and launching a fair challenge process. And it means instead of our haphazard revaluation cycles, phasing up to annual revaluations from 2029 – to give firms certainty that when the economy and property values shift, the tax base will keep pace.
In our report, we’re also calling for big steps to change how the system works with investment. At a time when we need investment in energy efficiency, in plant and machinery and more that are so important for our economy, it can’t be right that our rates system penalises and charges businesses more for upgrading their properties.
We want to retool it into a system that helps get private investment flowing where it’s needed most, not least with a targeted green super-deduction – a capital allowance rate of at least 120pc.
All that said, we know reforming a complex system like business rates will take time. So we will need a bridge between the current system and any long-term, substantive reform. Most likely that’s short-term support for the hardest hit areas – and freezing standard and small business multipliers where they are until after the 2026 revaluation.
With the Budget coming up, there’s a clear opportunity for the Government to set out its stall on business rates, with a policy bridge to make sure some of our most important sectors don’t fall through the gaps.
Right now nothing is more important for the strength of our economy and for the growth we need to create a more prosperous future for our people and our country, than Government and business working together, using public money to drive private investment.
But to do that, we must free the hand of business to invest, and that starts with getting our rates system right.