Government ‘giving with one hand while taking with the other’ over business rates, warns NHBF

The National Hairdressers’ Federation has welcomed chancellor George Osborne’s decision in yesterday’s Autumn Statement and Comprehensive Spending Review to extend 100% Small Business Rate Relief for the very smallest businesses for another year, until April 2017.

But the Federation has expressed dismay at the government’s decision at the same time not to extend the so-called “retail discount” that also allowed shops – including hairdressers, barbers and beauty salons – to reduce their business rates by up to £1,500.

Mr Osborne said the decision on Small Business Rate Relief would mean 405,000 of the country’s smallest businesses would continue not to have to pay any business rates at all, while a further 200,000 would benefit from only having to pay a tapered amount.

NHBF president Paul Curry said:

Mr Osborne’s decision to maintain 100% Small Business Rate Relief for another year is definitely good news. Anything that makes life easier for small and micro businesses is helpful and welcome. However, we want to see 100% relief being made permanent, rather than something in the ‘gift’ of the chancellor and able to extended or taken away at a whim. That is something we will continue to push for.”

On the scrapping of the retail discount, Hilary Hall, NHBF chief executive, added: “The chancellor appears to be giving with one hand and taking away with the other. Salons will be happy about Small Business Rate Relief but retail relief was a valuable benefit that made a real difference for many salons and barber shops.

The NHBF was also disappointed that the chancellor did not take the opportunity to outline any initial findings of the government’s wider review into business rates. This is now expected to be unveiled at the March 2016 Budget.

The NHBF is campaigning for a wholesale overhaul of the rates system, including moving it away from a tax based around physical properties to one that better represents the modern high street, where shops are competing with online and out-of-town retailers.

However, the NHBF did give a warm welcome to the chancellor announcement that the Employment Allowance, which allows employers to reduce the amount of National Insurance Contributions they pay for their employees, will rise from £2,000 to £3,000 from next April.

Finally, Hilary Hall said the NHBF would be closely watching for further details about the new apprenticeship levy from April 2017.

The levy will not apply to the vast majority of salons because they are too small but our larger members, including those running franchised chains, are concerned about the possible effect this levy could have on them and how it will operate in practice”.

Notes to editors:

Under the Employment Allowance, employers can reduce the amount of National Insurance Contributions they pay for their employees by up to £2,000. This will from next April be changing to £3,000.

Businesses with a rateable value of less than £12,000 can apply for Small Business Rate Relief. The very smallest, those with a rateable value of £6,000 or less, can get 100% relief on their rates, and it is this that has now been extended to 2017. The rate of relief gradually decreases from 100% to 0% for properties with a rateable value between £6,001 and £12,000.

Retail relief of up to £1,500 off business rates is available to businesses that occupy a retail property with a rateable value of £50,000 or less. It primarily applies to shops, restaurants, cafes and drinking establishments, but also covers hairdressing and beauty salons and barber shops.

The government has said the new apprenticeship “levy” being introduced from April 2017 will be set at a rate of 0.5% of an employer’s pay bill and will be paid through PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means, the Treasury has argued, that the levy will only be paid by firms with a pay bill in excess of £3m.