Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to ensure that the business rates system is supportive of SMEs; what assessment she has made of the potential merits of reducing VAT rates for smaller and medium sized businesses; whether she is planning to take steps to support SMEs in rural areas; and whether she has made an assessment of the potential merits of devolving decision making over business rates to local authorities.

The Government has extended Small Business Rates Relief to support small businesses to grow and expand, by giving them an additional two years of Small Business Rates Relief when they open a second premises. SMEs in rural areas may also be eligible for Rural Rates Relief if they meet certain conditions.

At £90,000, the UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD. This means the majority of UK businesses are not in the VAT system at all. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

Local Authorities are responsible for the administration of business rates, including billing, enforcement and decisions with regards the awarding of business rates reliefs, in line with legislation and guidance issued by the Government. Under the Business Rates Retention system, local authorities retain a share of rates collected locally to fund local services. The remaining share of rates is paid to central government as central share and is used by central government in its entirety to fund the local government sector.