Labour proposes ‘emergency’ support tax cut for businesses

Labour has proposed a package of "emergency" measures – including an immediate tax cut – to help ease the burden of rising costs on businesses.

The party claims that, under its plans, a typical small factory or workshop would save £2,700, a pub would be £2,600 better off and the average cafe or restaurant would benefit by £2,700.

In the long term, Labour said it would scrap business rates and replace them with a system that supports "growth", which it claimed would be "fairer between the small high street businesses based on bricks and the global tech giants based on clicks".

The party's initial proposals consist of a tax cut for small businesses, which Labour said could take effect this week if adopted by the Government; an energy support fund; a "green steel" fund; and scrapping the planned hike in National Insurance.

Jonathan Reynolds, the shadow business secretary, said businesses facing "a tidal wave of extra costs" are being "held back" under the Conservatives.

"Action is needed now to ensure firms remain viable and extra costs aren't passed on to consumers worsening the cost-of-living crisis," he said.

"Under Labour, small firms would be around £2,000 better off from this week through our plans to cut taxes and we wouldn't penalise small firms for expanding. Labour would back industry with our energy support fund and long-term plans to green the steel industry. It's clear great British businesses can't afford this Government."

The party said its analysis shows the current system of business rates is "acting as a tax on growth, with smaller firms facing big tax cliff edges if they expand".

"A typical hairdresser who expands from one to two sites would see their tax bill go from £0 to £5,000, while an average shop goes from paying £0 to £10,000," it said.

Labour's package of emergency measures would include raising the threshold for small business rates relief for a year, from £15,000 to £25,000, from April 1.

Meanwhile the party's energy support fund would prioritise energy-intensive industries such as steel, glass and ceramics.