For a number of years, businesses on the British high street have been calling for reforms to the business rates system; a call that has finally been answered.
In his Autumn Budget, the Chancellor announced new measures that he claims will mitigate the burden of business rates in England by in excess of £7 billion over the next five years and make the system “fairer, more responsive and more supportive of investment.”
Founded on the conclusions of the Government’s review of business rates, which was published alongside the Budget, the reforms include six measures that seek to minimise the associated costs for businesses within scope of the charges.
Here are the key points:
Temporary retail, hospitality and leisure discount – A new temporary business rates relief will be made available to eligible retail, hospitality and leisure properties for 2022/23. Eligible properties will receive 50 per cent relief, up to a £110,000 per business cap. Critics have already highlighted the fact that the cap may limit the effectiveness of this relief for businesses with multiple sites.
The business rates multiplier – The business rates multiplier will remain frozen for a second year, from 1 April 2022 until 31 March 2023. This means that the small business multiplier will be 49.9p (for businesses with a rateable value below £51,000) and the standard multiplier will be 51.2p (for businesses with a rateable value of £51,000 or more). Multiply your rateable value by your multiplier to show how much you will have to pay in business rates before any relief is deducted.
Improvement relief – This will offer 12 months of relief from higher bills for occupiers of an existing property which has an increased rateable value as a result of eligible improvements. The Government has said it will launch a consultation on this relief, with it set to come into effect in 2023.
Targeted business rate exemptions – Introduced from 1 April 2023 until 31 March 2035, these will support businesses utilising eligible plant and machinery in onsite renewable energy generation and storage and offer a 100 per cent relief for eligible ‘heat networks’, as part of plans to decarbonise non-domestic buildings.
Revaluations – One of the key criticisms of the business rates system before now has been the infrequency of revaluations. From 2023, the Government will increase the frequency of business rates revaluations so that they take place every three years, instead of every five. This should result in more accurate rateable values and reflect the market better. The Valuation Office Agency will receive extra funding from the Government, to support the delivery of this measure.
Transitional relief for small and medium-sized businesses and small business scheme extension – These schemes will be extended for another year and will restrict bill increases to 15 per cent for small properties (up to a rateable value of £20,000 or £28,000 in Greater London) and 25 per cent for medium properties (up to a rateable value of £100,000), subject to subsidy control limits.
What about the online sales tax (OST)?
Part of the earlier review looked at ways of implementing an OST as a means to make the retail business space more competitive. Presently, the likes of Amazon benefit from selling the same goods as high street retailers but with lower business rates due to where their warehouses are situated.
The OST proposals would be put forward with the intention of addressing the existing imbalance by taxing goods sold online. In its report alongside the Autumn Budget, the Government said it will continue to explore the arguments for and against a UK-wide OST and will publish a consultation shortly.
If such a measure were introduced, the revenue generated would be used to reduce business rates for physical retailers in England.
How can George Hay help?
To talk to us about what the reforms mean for your business, to find out more about your eligibility for any of the new reliefs and exemptions and for support with planning your investments around these, contact us at our offices in Bedfordshire, Cambridgeshire and Hertfordshire.
Link: Autumn Budget 2021