George Osborne will announce that rate rises will be limited to 2% in England and Wales next year instead of being linked to inflation. He will also extend a scheme that offers rate relief to small businesses. But he will stop short of a full review of a system widely seen as outdated, says the BBC. This is despite calls for such a move by some industry groups, as well as Business Secretary Vince Cable.
Business rates were set to rise by 3.2% next year, based as usual on the September retail prices index measure of inflation. But there has been intense lobbying by business organisations for a rethink by the Chancellor. It is understood he will cap the increase at 2%, a move which will mean more than £300m of revenue is lost next year.
He will also announce the extension for another year of a scheme which gives small firms relief from rates liability. Hugh Pym, BBC chief economics correspondent, said business rates were seen by many retailers as a crippling burden at a time when some high streets were struggling. Manufacturers wanting to expand felt the rates system could deter new investment, the BBC correspondent added.
In Scotland, local councils will be able to adjust their own business rates relief packages to reflect local needs under a plan unveiled by the Scottish government earlier this year.
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