Mounting pressure on the Government to change the way business rates are calculated has forced a move that could see retailers save £250 million.
During the 2016 budget the Government announced plans to switch to the Consumer Price Index (CPI), reasoning that the Retail Price Index (RPI) can outpace growth and uses rises faster. This failed after the General Election was announced.
The Government has now announced its commitment to base rates calculations on the CPI inflation rate from 2020.
The Treasury released a statement which read: “We are committed to switching business rates indexation from RPI to CPI from 2020 and will introduce legislation in due course.”
The Treasury claims that the changes would save businesses £1 billion in the first three years. Retail is set to save £250 million.
The move follows demands from pressure groups for a fairer tax system to help local shops, town centres and businesses.
Mark Rigby, boss of business rates adviser CVS, said: “The Chancellor has moved quickly and decisively to quell speculation.”