Autumn Budget: Business rates changes welcome but not enough

We welcome the announcement of the 50% business rates relief (capped at £110,000) for businesses operating in the leisure, retail and hospitality sectors.
November 3, 2021
We welcome the announcement of the 50% business rates relief (capped at £110,000) for businesses operating in the leisure, retail and hospitality sectors.

These are the businesses that have been most severely affected by the pandemic and, in some cases, were due to experience a significant rise in business rate liability from the 66% relief applied in 2020/21 to full liability, had the Chancellor not stepped in.

However, it is disappointing that the £1.5 billion relief fund announced in March to help those businesses financially impacted by the pandemic (but which did not qualify as ‘retail’ in order to gain relief), is yet to materialise.

Also announced in the Budget was the freezing of the uniform business rate (UBR) Multiplier for another year to 2022/23, which will at least allow some certainty for businesses in their budgeting for business rates.

The remainder of the support announced will be for those property owners who carry out improvement works or install equipment to improve a building’s energy efficiency.

The new Business Rates Improvement Relief will come into effect in 2023 and will encourage investment by business, landlords and developers, by providing a rate relief against the value of improvements for 12 months. However, it is a shame that this has been pushed out to 2023.

As expected, the increased frequency of the Revaluation cycle from every five years to every three years is welcome and has been subject to discussion for many years. It should allow revaluation to track movements in the rental market more closely, making valuation much more accurate.

Business Rates Review Findings

In addition to the changes to business rates which were announced in the Budget, the much awaited ‘Business Rates Review’ was also published.

Below we set out some of the most important findings:

  • 2023 Rating Revaluation will go ahead, effective from 1 April 2023
  • The Antecedent Valuation Date (AVD), the date where rental evidence is adopted to arrive at a Rateable Value (RV), will be 1 April 2021
  • As confirmed in the Budget, there will be an initial move to more frequent revaluations of three years
  • There will be a scheme in place to reduce the burden on small businesses with a limit on increases of 15% for RVs of up to £20,000, and 25% for those up to £100,000. There will also be a wider review of transitional relief in 2022
  • The current Check, Challenge, Appeal (CCA) process will remain for the 2023 Rating List, but will be subject to change from 2026
  • A new Duty to Notify will be introduced, this will mean that at the start of revaluation, it will become the ratepayer’s duty to notify the Valuation Office Agency (VOA) of any physical changes to the occupation, rent/lease or trade details, with penalties for non-compliance.

The review details further findings but, in short, the next Revaluation will go ahead and will be broadly similar to the current 2017 list in process terms, so ratepayers will still be able to challenge their assessment.

Business rates burden continues

Overall, the changes are welcome, but we still believe the Government could have gone further. Historically, the VOA would provide their rental evidence at an earlier stage in the appeals process. This is no longer the case.

The VOA does not need to provide clarity over how they’ve arrived at their answer and instead as the burden of proof is on the ratepayer or their advisors at the outset.

A change to this process would ensure the VOA are seen to be transparent and have a desire to arrive at the right value, as well as preventing speculative valuation challenges being raised.

What is clear, is that there has been a gradual move to re-assign the duties of the VOA on to the ratepayers, who will now need to update the VOA on changes to their property – yet again, adding extra burden to businesses.

As a result, it will be even more important for ratepayers to get business rates advice early on, not only ensure that their rateable value is correct and to help navigate the system, but also to provide the information necessary to document physical changes, understand the potential implications of these, and how it impacts them financially.

For help and advice on your business rates liability on the back of the changes announced in the Budget, or for more information on our business rates audit service, get in touch.

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