Government’s business rates consultation – current proposals for reforms insufficiently radical
satindersohal, 17 February 2026
satindersohal, 17 February 2026
The Government should undertake radical reform of local business taxation by replacing business rates (based on commercial property value) with a local supplement tax on profits, according to our Partner Alex Altmann.
Responding to the Government’s consultation on business rates which closes on 18 February, Lubbock Fine argues that the current system is overly complex, leads to endless disputes and represents a significant barrier to inward investment into the UK.
Alex Altmann, who heads up our German Desk, also says that most proposals for reforms of business rates are effectively minor tweaks that would leave in place an overly complex system which really needs a complete overhaul.
Altmann said: “Swapping business rates for a local tax on profits would create a fair and predictable tax system.”
“It would also create a tax system that would support business as they go through their early unprofitable launch or growth stage. It would also automatically be a tax that would become less of a burden when a business or a sector is struggling.”
Altmann says that the flaws in the current rates system are shown by the debate over what rates the pub sector and other hospitality businesses should pay.
Increases in rates are unpredictable and whilst some sectors can get reductions through intense lobbying, like the pubs sector, other sectors cannot obtain reductions.
Alex Altmann adds: “Pubs are a clear example of how unfair the system has become. Many are viable community businesses but operate on tight margins, yet they are hit with tax bills that take no account of profitability. A local supplement tax on profits would be far fairer and far more supportive of growth.”
“As the tax is based on profits it would only be paid by businesses that could afford it.”
The complexity of the business rates regime is illustrated by the scale of disputes it generates, with an average of 122,000 first stage appeals each year and around 28,000 full disputes. Lubbock Fine says this level of challenge demonstrates a system that is fundamentally broken rather than in need of minor adjustment.
Under the current model, local authorities also have no incentive to attract profitable businesses to their areas, as the business rates they collect are not directly linked to company performance.
Replacing rates with a local tax on profits would better align local revenues with economic success and encourage councils to promote profitable business hubs. It would also encourage businesses to invest more in their premises as such investment would no longer risk a business rates hike based on property value.
“If the Government is serious about boosting investment and simplifying tax, this consultation must lead to genuine reform. Replacing business rates with a simpler, profit‑based local tax would remove a major barrier to growth and make the UK a more attractive place to do business.”
At Lubbock Fine, we work closely with UK and international businesses to navigate the complexities of the current business rates regime and wider tax landscape. Our team advises on:
Whether you are questioning how the proposed reforms could affect your organisation or exploring ways to optimise your tax position, our experts are here to guide you.
If you’d like to discuss how the business rates consultation may impact your business, please get in touch our experts.
