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Gloucestershire Business News

Small firms 'penalised' by rates for improvements

Small firms should not be penalised with higher rates' bills for 'going green' or improving staff facilities, a business pressure group says.

The Federation of Small Businesses has written to the Government to outline steps to protect small firms and spur economic recovery as part of the approaching business rates review.

Mike Cherry, FSB national chair, describes the tax as "regressive and outdated", and encourages policymakers to stop penalising investments aimed at improving sustainability and working conditions for employees, such as solar panels, insulation, ventilation, recycling facilities and bike sheds.

This kind of investment typically causes a property's value, and by extension its rates bill, to increase.

The FSB is also calling for an exemption for all childcare providers to bring the system in England in line with that in Wales and Scotland.

Other suggestions include removing some of the smallest businesses from the rates system by increasing the threshold for 100% small business rates relief to £25,000.

The body also wants the removal of a quirk in the system that causes a firm operating across two premises to be charged rates even if its total valuation should see it qualify for relief.

It also urges that business rates revaluations are light-touch and transparent and do not prevent valid appeals.

Mike Cherry said: "The Government is absolutely right to overhaul a business rates system which often lets online, retailers operating from remote warehouses, off the hook whilst punishing small businesses that serve as community hubs.

"This is a levy that hurts small firms trying to do the right thing: if you put solar panels on the roof to aid your transition to net zero or install ventilation to support the wellbeing of your staff, the Valuation Office Agency will advise your local authority that you should be paying more in business rates.

"As we look to aid the small business community's transition to net zero, and employee safety and wellbeing as we come out from the pandemic, this simply cannot be the right approach to taxation."

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