Business rates post-budget update

Business rates post-budget update 02 November 2021

What are the main takeaways from the most recent budget?

The Chancellor announced in the Autumn Budget that business rates are here to stay with a commitment to 3 yearly revaluations from 1st April 2023. The Treasury also published a slimmed down version of their Fundamental Review, setting out a roadmap to try and finally modernise the tax.

The 4 headline Budget takeaways are:

  1. The business rates multiplier has been frozen again for the 2022/23 rate year; keeping the multipliers at 49.9p and 51.2p (England). Avison Young welcome this news and have been advocating the freezing of the multiplier. The Government indicate this will reduce rate liabilities by £4.6bn over 5 years. However, we believe this should start a downward trend in reducing the multiplier to a more sensible and affordable level for all ratepayers.
  2. A new £1.7bn temporary business rates relief scheme for eligible retail, hospitality and leisure (RHL) properties for 2022-23. Eligible properties will receive 50% relief, up to a cap of £110,000 per business. This is welcome news for small and medium sized businesses but provides little help to large businesses with multiple RHL properties.
  3. The Government will extend transitional relief for small and medium-sized businesses, and the supporting small business scheme, for 1 year (2022-23). This will restrict bill increases to 15% for small properties and 25% for medium properties, subject to subsidy control limits.
  4. Starting in 2023, there will be 2 new reliefs:
    • a. Sustainable investments (including renewable energy generation and storage to support the decarbonisation of buildings).
    • b. 100% improvement relief for eligible improvements to existing property which increases Rateable Value.

Alongside the Autumn Budget the Government announced several planned reforms to the current system. Avison Young continues to have real concerns that the direction of travel is still on preserving Government revenues and reducing the work of the Valuation Office Agency (again to save costs to the Exchequer).

The proposed reforms include:

  • Commitment to shorter revaluation periods of 3 years so rates more closely follows market fluctuations.
  • Providing £0.5bn funding the VOA to modernise their service and deliver the revaluation.
  • Align HMRC processes and records more closely.
  • Revise the Check, Challenge, Appeal system and move to a 3 month Challenge window from 2026.
  • Require ratepayers to disclose information about their property and improvements.

Further consultations will be brought forward to review these reforms.

The Government did not give any commitments around the bigger issues, including:

  • Will downwards transitional relief be scrapped? (Consultation due in early 2022).
  • Will the business rates burden of circa £25bn be fundamentally reduced – i.e. reducing the UBR from £0.499 to £0.35?
  • How can an Online Sales Tax be implemented and used to off-set retail exposure to business rates?

As part of our 2023 revaluation research, The Great Rebalancing Act, our Business Rates experts explore these issues and find solutions.

2023 Revaluation, The Great Rebalancing Act

Avison Young has undertaken detailed research to understand the impact of a 2023 revaluation. Our research predicts the changes in RV across the major sectors and locations across the country, and the new level of UBR from 2023. We also review the Government’s recent reform announcements and outline Avison Young’s position on what needs to happen to ensure the rates system remains both relevant and equitable for the future.

We invite you to read our research for more information and contact our team of experts to assist you with any queries you have regarding business rates across your portfolio.

Read our report here.

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