Treasury Admits Current System Is Outdated

The business rates system in England is to undergo a "radical" review in time for next year's Budget, according to the Treasury.

Chief Secretary Danny Alexander said the system will be overhauled so that it is "fair, efficient and effective", noting that the total sum collected from businesses will not change.

The review will examine how companies use property, taking into account changes in property values and how similar taxes are administered in other countries.

Under the current system, rates are charged to retailers based on the value of their premises. This means the size and location of a business's property can dramatically affect how much they pay, which many business owners consider unfair.

Additionally, business rates are still based on valuations made in 2008, before the economic downturn hit the UK's commercial property market.

"We'll be making the case for removing the smallest firms from paying business rates completely... and introducing more frequent valuations," John Cridland, director-general of the CBI, told BBC News.

Expert Opinion

The business rates system is very outdated and does not reflect the modern business world. A fundamental review of the system is needed to make it more effective. <br/> <br/>"In particular empty business rates need an urgent review, as this often serves only to punish further those businesses that have already failed by requiring them to continue to pay such rates – despite the fact that they may be producing no income from the property."