London local government will be able to keep all its business rates growth next year as part of a 100% retention pilot.
Phillip Hammond used today’s Budget to allow the 32 London boroughs, the City of London and the mayor to keep additional business rates income raised locally, which in 2018/19 is forecast to be in the region of £240m.
The boroughs will not retain revaluation growth.
The announcement builds on the devolution deal signed last spring by the city’s leaders, who have since been devising a scheme for the distribution of additional business rates.
Chancellor Philip Hammond
London Councils chair Cllr Claire Kober said: ‘This is an essential step towards more sustainable funding of the local services on which Londoners and London’s businesses depend.
‘It will enable further investment in the vital infrastructure to support economic growth and create more jobs across London.
‘Agreeing a business rates scheme for London, between the mayor and all the boroughs, has been the key to the Treasury agreeing that London can keep more business rates revenue and shows our collective ambition to better serve London's residents and businesses by gaining more control over our city's finances.’
Mr Hammond also announced a string of changes to the business rates system in a bid to make it 'fairer'.
He announced that revaluations would take place every three years – as opposed to five – after 2022.
The chancellor also announced he would bring forward the planned switch of indexation from RPI to CPI, which was previously scheduled to take place next April.
The controversial so-called staircase tax, which charged extra to businesses with rooms linked by communal stairs, lifts or corridors, has also been addressed.
Businesses will be able to ask the Valuation Office Agency to recalculate valuations to ensure bills are based on previous practice, backdated to April 2010.
Accompanying documents state that local government will be 'fully compensated' for the lost business rates income as a result of the reforms.
This story first appeared on themj.co.uk.