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The British Property Federation, the body that represents many commercial clients of the construction industry, has urged the government to seize a ‘once in a generation opportunity’ to undertake a truly radical review of the business rates system in England.

Welcoming further details of the long-awaited review, announced by Chief Secretary to the Treasury Danny Alexander today, the British Property Federation (BPF) set out the key tests by which any replacement to the current system should be judged.

It said government should aim to create a new business rates system that is:

  • Responsive to the wider economy – where business rates bills rise and fall in line with rental values. At present, the tax rate tends to fall as property values rise, and rise as property values fall,
  • Based on up-to-date property values – businesses should pay rates based on up-to-date rents, rather than on values that are up to nine years old as at present,
  • Designed to encourage the greatest possible investment – the business rates system should be set at a level that allows development to go ahead across the country, and should not penalise businesses for refurbishing or renovating their property through rates charges on empty property.

The BPF said it was understandable that Government would want to make the review “fiscally neutral”, but pointed out it was the only UK tax designed to raise a set amount each year, regardless of other factors such as economic growth, business profitability and property values.