Online sales tax slated after Sunak eases trade tariff burden
The reform was an electoral pledge for Boris Johnson, who made a clear pledge in 2019 that a re-elected Conservative government would reduce the burden on corporate rates.
A major overhaul of the system is still ongoing even if it will be necessary to wait until the end of the consultation on an online sales tax, requiring a complex international regulation. Documents released alongside the budget indicated that there was a “high level of interest” in an online sales tax, but noted that no final decision had been made.
The government has granted significant tariff relief to help high street businesses weather the pandemic.
Retail, leisure and hospitality sites in England received £ 17 billion in trade tariff relief, including 15 months’ leave in the two fiscal years.
Mr. Sunak also said companies will be encouraged to invest money in green technologies and increase investment in their factories and offices through further tax breaks.
Investment incentives worth £ 750million will allow companies to avoid sudden increases in their business rate bills after making improvements to their property, the Chancellor has revealed.
The business rate system effectively punished companies for investing, as it increased the value of their property and subsequent tax bills.
In a new impetus, Sunak said that starting in 2023, commercial properties subject to corporate tariffs will be reassessed every three years instead of the current five.
The current frequency of revaluations is a major issue for businesses as their tariff bill is tied to outdated property values which may be considerably too high. Currently invoices are based on rental values for 2015.
The adjustments to corporate tariffs were part of a series of policies to encourage business investment during the post-Covid recovery.
The Treasury has broadened research and development tax breaks to include cloud computing and data costs. Ministers also extended the annual investment allowance of £ 1million – a break that allows companies to deduct the cost of investments from their taxable profits – from December to March 2023.
Bosses praised the additional relief, but expressed frustration at the continued delays for a complete overhaul.
Jace Tyrrell, Managing Director of New West End Company, which represents London’s West End companies, said: “Reversing the inflation-linked multiplier hike can ensure that rates do not rise this year, but they are still too high. “
He added that by capping the 50pc high street rebate at £ 110,000, businesses in city centers would lose out.