Labour’s promise to abolish business rates in the UK has been met with skepticism by property specialists. As the party gains momentum in the polls, it has pledged a series of measures to “save the high street,” including replacing business rates with a fairer system. However, experts at commercial property firm Colliers argue that the proposals lack clarity and that reform, rather than abolition, is the key.

Colliers suggests that Labour may replace the current system with a valuation process that combines land and rental value. The party is also reported to be in favor of extending small business rates relief to premises with a rateable value of up to £25,000, rather than the current threshold of £15,000. This potential change could be funded by an increase in the rate of digital services tax. Additionally, Labour has proposed more frequent revaluations, immediate reductions in bills when property values decrease, and closer alignment of rates with economic changes. The party also aims to incentivize businesses to occupy vacant premises and encourage green improvements.

While Colliers acknowledges the need for reform, it does not support complete abolition or the introduction of a Land Value tax. The firm believes that Labour’s proposals could lead to a transfer of tax responsibility from businesses to landlords, which may not be fair. Furthermore, there are concerns that any new system could be just as complex as the existing one.

Business rates have long been a significant source of revenue, generating £26 billion for the government. However, traditional retailers argue that the current system unfairly penalizes them in comparison to e-commerce businesses. Despite some recent adjustments, these retailers feel that their situation has not significantly improved.

Labour’s proposals aim to address these concerns and offer relief to struggling high street businesses. While property specialists appreciate the party’s willingness to listen to the industry’s frustrations, there are worries about the potential consequences and complexities of implementing a new system. As the UK grapples with the challenges facing the retail sector, the debate over business rates reform is likely to continue.

Useful Links:
1. Introduction to Business Rates
2. What Would a Labour Government Mean for Commercial Property?