Non-domestic Rates

(asked on 26th January 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the effect on businesses of the increase in the business rates multiplier in England since 1990.


Answered by
Lucy Frazer Portrait
Lucy Frazer
Secretary of State for Culture, Media and Sport
This question was answered on 3rd February 2022

The business rates multiplier was frozen in 2021-22. Additionally, at Autumn Budget 2021, the Chancellor announced the decision to freeze the multiplier for 2022-23, a tax cut worth £4.6 billion over the next 5 years. This will support all ratepayers, large and small, meaning bills are 3 per cent lower than without the freeze.

A restaurant chain with 400 restaurants with a rateable value of £45,000 each will receive support worth around £1,350,000, or 3 per cent of their rates liability over the next 5 years.

Cutting the standard business rates multiplier to their 1990 levels of 35p in 2022-23 would cost an estimated £9 billion annually, with costs rising every year to over £11 billion per year by 2030. A cut of 1p to the multiplier in 2022-23 would cost around £600 million.

The revenue forgone for a cut of this scale would be highly significant. For instance, £10 billion of revenue is equivalent to around 20 per cent of 2021-22 local government Core Spending Power. Raising the equivalent funding elsewhere in the tax system would require an increase of around 1.5 percentage points to the standard rate of VAT.

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