Business rates change and targeted support can help limit economic damage, chartered accountants say
Tuesday 27 October 2020: Changes to business rates, and targeted support to industries most in need, will help limit the economic damage caused by the pandemic, chartered accountancy body ICAEW said today.
The results of a survey of its members, published today, found that a third of businesses would need government support over the next six months – and some 70% of those were not confident that the support on offer from the government would keep their business going for the next year.
Business was down at three in five companies and a third expected to make redundancies over the next six months, the survey found.
ICAEW said the government needed to review its strategy and consider a sectoral approach to fixing the damage caused by the pandemic, to help sectors – such as hospitality, leisure and retail - which were still struggling.
Reduce taxes to boost the economy?
Three in five respondents said a reduction in business rates would help the high street and therefore boost the economy. Half of respondents said they thought a reduction in employers’ National Insurance contributions would be helpful, and a third said they thought further reductions in VAT rates would be helpful.
Meanwhile, three-quarters of those surveyed said their businesses had accessed one of the government’s loan or support schemes during the pandemic. Three in five had furloughed staff and almost a half had deferred VAT payments.
Iain Wright, ICAEW Director of Business and Industrial Strategy, said:
“With the latest restrictions casting a new black cloud over businesses that were beginning to recover from the economic effects of the pandemic, it’s clear that more intervention will be needed from government.
“In particular, some struggling companies could fail when faced with inflexible business rates bills. Reducing the business rates multiplier would bring down the cost of this charge, and therefore lessen the burden on companies at this critical time.
“Although the whole economy is suffering, it is striking that the economic effects of the pandemic affect some sectors with much more brutal damage than others. Targeted sectoral policy measures from government have been seen to work earlier in this crisis. With the prospect of more restrictions threatening the very survival of businesses in some sectors, chartered accountants are telling us they would like the government to provide financial support on a sectoral basis to help those industries most in need.”
Notes to editors
1. An online survey was sent to members working in businesses across every economic sector and UK region. The survey was opened from 15 to 21 October, 401 responses were received. Data is available on request.
2. 31% of businesses said they would need government support in the next six months.
3. 71% of those businesses that said they would need government help said they felt not very confident or not at all confident that the support on offer from government would keep their business going for the next year.
4. 62% of respondents said business was down and 31% said they were likely to make redundancies over the next six months.
5. Respondents were asked which possible actions by government would be helpful in boosting the recovery of the UK economy. 62% said a reduction in business rates, 51% said a reduction in employers’ National Insurance contributions, and 37% said further reductions in VAT.
6. 76% of respondents’ businesses had accessed a coronavirus loan or support. 63% had furloughed staff and 48% had deferred VAT payments.
Please direct all media enquiries to:
Ruth Pott-NegrineSenior Media Relations Executive, ICAEW
T: +44 (0)207 920 8612