Budget 2021: Chancellor Pledges Biggest Cut to Business Rates in 30 Years

2nd November 2021

Chancellor of the Exchequer Rishi Sunak claimed he is making the biggest cut to the business rates tax in 30 years as he set out his Budget.

Admonishing the Labour Party over its recent pledges to abolish the tax, Sunak said he would not be making "reckless unfounded promises to abolish a tax that raises £25 billion a year as that would be completely irresponsible".

Sunak said the government would retain business rates but with key reforms to ease the burden amounting to £7 billion over the next five years.

He said that for one year there will be a 50% business rates discount for businesses in retail, hospitality and leisure up to £110,000.

"Pubs, music venues, cinemas, restaurants, hotels, theatres, gyms, any eligible business can claim a discount on their bills of 50%, up to a maximum of £110,000," Sunak said.

Sunak said that, with other reliefs, it amounted to the biggest single-year cut to business rates in 30 years. Sunak said the cut is worth almost £1.7 billion, and added that, with Small Business Rates Relief, more than 90% of all these businesses will see a discount of at least 50%.

There will be more frequent revaluations too.

The Chancellor said: “First, we will make the business rates system fairer and timelier with more frequent revaluations every three years. The new revaluation cycle will be delivered from 2023.”

He added: “We’re introducing a new investment relief to encourage businesses to adopt green technologies like solar panels. And I’m announcing today that we’ll accept the Confederation of British Industry and the British Retail Consortium’s recommendation to introduce a new ‘business rates improvement relief’.

Sunak said the investment relief to encourage green technology would amount to £750 million in investment incentives.

“From 2023, every single business will be able to make property improvements – and, for 12 months, pay no extra business rates.”

That will mean that from 2023 any business introducing improvements such as adding new air conditioning will not pay extra.

Vivienne King, chair of the Shopkeepers’ Campaign, immediately attacked the announcement, saying Sunak had "betrayed the high street" and broken the Conservative manifesto pledge by not reducing business rates as promised.

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