Firm urges action on business rates and employment costs

Chancellor George Osborne should use next week’s Autumn Statement to reform business rates, according to a leading business adviser.

Tony Medcalf, Tax Partner, at Moore and Smalley chartered accountants and business advisers, believes reforming the ‘punitive’ tax to would encourage business growth and create new jobs to boost the economy.

He said local authorities should be given greater freedom from central government to devise a more flexible system of rating that focuses on promoting enterprise.

Business secretary Vince Cable hinted in October that business rates may be addressed in the chancellor’s final Autumn Statement of this parliament on December 3.

Tony said: “Business rates are a real constraint for those businesses that are considering a move to larger premises and I’m aware of businesses that have actually downsized to save on business rates.

“Of course, business rates are an essential element in funding local government services. However, over recent years I have seen more small businesses put under significant financial pressure from escalating rates. This must be putting a brake on the economic recovery.

“Business rates have become merely a tax collection exercise where it’s hard to see what businesses get back in return. I would like to see an overhaul of the system so each authority is required to devise a system of rating which is mindful of business needs and has the promotion of enterprise as a key component. The system also needs to be flexible so it can react to changing fortunes in the local economy.”

Tony would also like to see action taken to lower employment costs for businesses to encourage job creation.

He said: “Businesses have already found their employment costs going up substantially with the advent of auto-enrolment pension legislation. While the £2,000 employment allowance has provided some support, for me, the rate of 13.8 per cent on employer NICs is just too high.

“I dare say that many businesses would prefer to see a cut in employer NICs than a cut in the rate of corporation tax because with the latter, you’re only really getting taxed if you’re making money, whereas employer NICs remain the same whether you’re struggling or being successful.”