21 September 2020: ICAEW has warned that urgent action is needed before the current business rates holiday ends in April 2021 and suggested that there was a strong case for a significant reduction in the multiplier.

In its response to the first part of HM Treasury’s Business rates review: call for evidence, published on 21 July, ICAEW said: “In the short-term there is a strong case for a significant reduction in the multiplier.”

Published as ICAEW Representation 70/20, the response argues that at more than 50p for each £1 of rateable value, the multiplier is too high. “The tax liability has reached unsustainable levels,” it concludes.

ICAEW argues that a reduction in the multiplier is a simple and relatively fair way that government can preserve the core revenue base, while giving time to properly consider further reform of business rates to reflect the changes in the way that business now operates, in particular with the move to online which has accelerated since the start of lockdown.

ICAEW also highlighted that urgent action is needed before the business rates holiday for retail, hospitality and leisure ends in April 2021. In the current situation, without further help many businesses are likely to fail when faced with inflexible rates bills, which will be based on historical values that do not reflect current economic conditions.

ICAEW will be submitting a response to the second part of the government’s review into business rates at the end of October 2020. This document will consider in more detail the other aspects of the business rates systems, and possible ways that it could be reformed to address the problems highlighted. Members are requested to send any comments concerning this aspect to Frank Haskew, the Head of ICAEW's Tax Faculty.