Rachel Reeves told to scrap business rates for new profit tax in Budget
A City accountancy firm has called on Chancellor Rachel Reeves to scrap business rates in her Autumn Budget and replace them with a new profit tax.
Lubbock Fine said business rates, which have been the topic of much lobbying in recent weeks, should make way for a variable local tax on profits.
The firm said its suggestion would effectively be a local corporation tax and be based on how much profit a business makes in each region of the UK.
Lubbock Fine said it would be set and collected by local authorities and not be based on property value – which business rates are.
Alex Altmann, partner at Lubbock Fine, said business rates are seen by inward investors and UK businesses as ‘overly complex and too expensive and is a disincentive to expand and grow a business in the UK’.
Business rates ‘undermines enthusiasm’
Altmann said: “Most inward investors into the UK find business rates archaic, impenetrable and off-putting.
“That there are so many disputes shows that business rates need a complete overhaul – a replacement, rather than tinkering.
“The complexity of tax rules in the UK is certainly one of the reasons why the UK is finding it hard to attract inward investment and it also undermines the enthusiasm of UK entrepreneurs to start and grow their businesses.
“Business rates assessments and disputes are not dealt with by the UK’s tax authorities, but by local councils who often lack technical expertise and resources to impose the tax properly.
“Inward investors and growth businesses would much prefer a system where they are simply paying a percentage of profits towards local taxes.”
Altmann has also argued that the current system ‘piles pressure’ on new businesses and inward investors by taxing them before they are profitable.
He also said that if the government is serious about driving economic growth, it must simplify taxes and so that they are “less complex for UK businesses and less off-putting to inward investors”.