High street shops and restaurants feel the burden of business rates acutely, as the tax does not reduce if their profits fall.
The Chancellor announced some help for businesses who operate from retail premises with a rateable value of up to £51,000. Their business rates bills will be cut by one third for the two years from 1 April 2019. Local newspapers will also continue to enjoy a £1,500 per year business rates discount on their offices in 2019-20.
Business rates are payable by owners of self-catering and holiday accommodation instead of council tax, which is paid by individuals on residential property. In some instances, the business rates charged are lower than the council tax would be for the same property, as small businesses can claim a number of discounts.
To qualify as a small business for business rates the holiday accommodation does not have to be let for any minimum period. This contrasts with the rules for furnished holiday lettings for income tax, which require the property to be actually let for at least 105 days a year to achieve the favourable income tax treatment.
Thus, a property which is held- out as a holiday letting but does not generate much income will benefit from registering as a business, even if it does not qualify as a furnished holiday letting for income tax. The government will consult on how to ensure that only genuine businesses pay business rates rather than council tax.