Conclusion
The forthcoming decisions made by the new labour government as to how they take forward business rates are extremely important.
A knee jerk reaction is not what business needs. They crave certainty and a commitment from the new government to address the fact that the tax rate is too high.
The journey commenced with the last government who halted the inexorable increase in business rates by freezing the UBR to offer some assistance because of the pandemic. They broke the trend last April, making the distinction for large business by increasing the supplement by 6.7% CPI inflation to create a standard multiplier. Notwithstanding, the underlying UBR at 49.9p has remained fixed for 5 years.
Now represents a key moment for Rachel Reeves and her 30th October budget. Be bold and finally decouple the UBR and associated supplements from inflation next April and going forwards. Then allow the 2026 rating revaluation to drive down the UBR to the level we forecast at sub 44p.
Allow the shorter revaluations to then determine the extent the tax can rise, and we predict that by 2029 we will have a base UBR at 40p.
The tax needs digitalising to meet modern standards and the relief system needs reconsidering to ensure it is pertinent to business and encourages investment. Commitments from government as to how they will invest not just to benefit government but also ratepayers is absolute necessary. However, this is not the nub of the problem.
Business needs a clear commitment from government to deliver a target tax rate of 40p as the primary goal over the next 5 years. This is an objective that is within their grasp. It will finally create stability in the tax base and ensure that business' benefit.