Just one in four ICAEW members polled working in retail, hospitality and leisure said their companies would be able to pay their rates in full at the end of the year-long holiday on 31 March.
ICAEW said it hoped the Chancellor would listen to these companies as he prepared his statement and extend the rates holiday in England into the spring.
As well as highlighting the need for an extension to the rates holiday, ICAEW also urged fundamental, longer term changes to be made to improve business rates as part of the Treasury’s ongoing review of the system, so the tax is fit for the future.[1]
John Boulton, ICAEW Technical Policy Director, said:
“The Chancellor must listen to the calls from hard-pressed companies who cannot afford to make their business rates payments and currently face a cliff-edge in April.
“These businesses need breathing space until they can re-open and are making money again.
“And as we consider the end of this lockdown, the time is right for a fundamental rethink of business rates, to build a system fit for the high street of the future.”
Just 1% of ICAEW chartered accountants who work in practice said all their clients in retail, hospitality and leisure would be able to make payments in full if the rates holiday concludes at the end of March.
Some 40% said their clients could make the payments with a negative impact on their cash flow, and 59% said some of their clients would not be able to pay the tax in full.
Of those chartered accountants working for retail, hospitality and leisure businesses, a quarter said they would not be able to make rates payments in full once the holiday ends.
Half said they could make the payments but with a negative impact on cash flow, and a quarter said they could make the payments.
ICAEW suggested that the multiplier used to calculate business rates should be reduced, which would immediately decrease the amount businesses are charged.[2]
It added that a clearer link between rates and current market values, would help make the tax less problematic for businesses. The use of more timely data, and clearer information about rates calculations, could also improve the tax.
Notes to editors:
1. The Treasury review of business rates can be found here
2. ICAEW’s recommendations for business rates reform can be found in our submission to the call for evidence
3. ICAEW’s survey of its members ran from 28 January to 2 February 2021
4. Full results of the survey can be found in our Business Pulse Check
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