The Chancellor of the Exchequor, Rishi Sunak, has announced a 50% cut to business rates for hospitality, retail and leisure sectors in order to help businesses hit hardest by the pandemic. The tax cut will affect pubs, music venues, restaurants and bars who are all set to benefit from the scheme.
How does the tax cut work? Hospitality and retail businesses will be able to claim 50% off their bills at the end of the tax year for the value of up to £110,000, which is the cap per business. The chancellor ruled out cutting business rates completely.
The slash to business rates is set to be worth £1.7 million, which: ''apart from the Covid relief bill, [this] is the biggest single tax year cut to business tax in over 30 years’', said the Chancellor.
He also pointed out that, when combined with the current small business relief scheme, ''over 90% of all these businesses will see a discount of at least 50%".
Additionally, from 2023 businesses will be able to make improvements to their property without having to pay high business rates for the following 12 months. Further announcements saw the government cancel next year’s increase in rates, as well as a reduction in the frequency of business rate re-evaluations from five years to three years.
UK Hospitality chief executive Kate Nicholls welcomed the change, stating: "We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the chancellor's move today to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year.
However, she also mentioned that: "The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses."
The changes come after 18 months of discussion about business rates, with consultation underway about introducing an online sales tax, too.
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