Business rates revenue to reach high of £23.5bn next year

17 Feb 16

Business rates revenue is forecast to reach a record £23.5bn in 2016/17, according to council submissions to the Department for Communities and Local Government.

According to figures, published by DCLG today, revenue collected by councils will increase by around £400m compared to the current financial year.

Under the existing local authority finance regime, half of this revenue (£11.75bn) will be retained by local government through the top-up and tariff system, while councils also retain half the growth in their local area. As a result, 90% of councils are expected to see an increase in rates income next year.

Chancellor George Osborne plans to fully devolve business rates to local authorities by 2020, with an expanded top-up and tariff system in place. Additional duties and grant responsibilities are expected to be devolved to local government as part of this change to ensure the switch is fiscally neutral.

Publishing the figures today, local government minister Marcus Jones said the projected increase was down to rise in the number of new business across the country.

“As part of our long-term economic plan British business is on a roll,” he said.

“Councils already plan on handing out discounts of £3.2bn which supports charitable work, fills vacant shops and encourages entrepreneurs but we want to further incentivise councils to do even more. That’s why by 2020 councils will have greater financial autonomy and be handed the power to cut rates as much as they like to boost enterprise in their local areas.”

As well as councils being able to cut rates, combined authorities that reach devolution deals with government to create directly elected mayors would could increase rates to fund local infrastructure projects if they got backing of local businesses.

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