The government will conduct a full review of the structure of business rates, although it will not report until the budget in 2016.
The move comes amid reports that chancellor George Osborne has accepted there is not an even playing field between bricks and mortar retailers on the high street and online companies.
Osborne also announced that business rates relief would be doubled for a further year and the inflation-linked increase in business rates would be capped at 2%.
The Association of Convenience Stores was among the first to welcome the move on rates.
Chief executive James Lowman said: “We are delighted that the chancellor has listened to our concerns on business rates by committing to a full review. Local shops will welcome the 2% cap on rates increases and the extension of the higher threshold for small business rate relief, alongside the increased £1,500 rates discount for shops on the high street. We are committed to rates reform that works for local shops and will play a full part in the review in the coming months.”
“We welcome the full review of the structure of business rates,” added John Rogers, Sainsbury’s chief financial officer and chair of a BRC industry-wide group on rates.
“A clear consensus has emerged across businesses of all sizes and from all sectors - our current outdated system of business rates isn’t just a retail problem, but a business problem. We will be fully engaging with the review to ensure we get a new system which is fit for purpose in the 21st century.”
In another move seen as an attack on online companies sucking money from the UK, Osborne announced a so-called “Google tax”, which will slap a 25% levy on profits made in UK but diverted elsewhere.
The chancellor said it was a move to make sure multinationals “pay their fair share”. Shares in UK-listed fmcg giants, including SABMiller, Unilever, Reckitt Benckiser and Diageo, were down this afternoon on concerns they will also be caught by the new tax.
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