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The recent announcement by the British Chancellor of the Exchequer, Rachel Reeves, that business rates should be frozen and replaced has certainly set the tone for the real estate sector (“Work to reduce tax cuts and pursue rich’s on a balanced UK budget”, September 27).
However, it does not offer an immediate solution. A simple answer would be to link the liability of the business rates to the actual rent paid.
In this way, rent adjustments would automatically result in business rate adjustments; both up and down. This can be achieved through a system of self-assessment; something that both corporate and individual taxpayers understand well.
The taxpayer will use his previous year’s rental rate to calculate his liability tax and pay monthly. There will be an annual adjustment and under statements – as with other taxes – interest and possible fines are subject.
The beauty, of course, is that the burden is passed on to the taxpayer. And a great saving would result from long-term and expensive occupations; and the government does not have to undergo the revaluation process. In fact, there is an annual revaluation that is simple to understand and would be considered fair.
Taxpayers only appeal if they pay too much! In this way, the government benefits from upward swings. Anti-avoidance legislation will be used to curb the drafting of lower rents.
London W1, United Kingdom