The Treasury claims that the changes will save companies £2.3bn, so what are they and how will they affect your rate liability?
Business rates calculations
The way in which business rates are calculated is set to change from 1 April 2018, with increases in the multiplier (UBR) to be based on the Consumer Price Index (CPI) percentage, rather than the Retail Price Index (RPI).
The multiplier for the 2018/19 rate year will now increase by 3%, instead of the intended 3.9% RPI figure, in a move expected to save businesses an estimated £210m over the next two years.
The government’s original intention was to apply this move to CPI in April 2020, so the Chancellor has brought the introduction of this in two years earlier than planned.
Abolition of ‘staircase tax’
The so-called ‘staircase tax’ refers to the financial impact of action taken by the Valuation Office Agency (VOA) following a decision by the Supreme Court on the ‘Mazars’ case earlier this year.
Under the ruling, the Valuation Office Agency had been busily engaged in undoing previous agreements reached with rate payers and re-dividing their properties back into one or more assessments.
This in turn led to the loss of allowances and, in certain cases, the loss of Small Business Rate Relief (SBRR), so their rates increased as a result. The impact was felt particularly hard by small businesses, when the implementation of the ‘staircase tax’ was backdated to 2015.
However, under proposals detailed in the Budget, legislation will be changed to allow businesses to request that their previous rate liability, before division by the Valuation Office Agency (VOA), be reinstated.
The mechanics of this has yet to be revealed but its’ clearly a welcome move, as it will benefit thousands of ratepayers and represents an important boost for the finances of many small businesses.
Frequency of Revaluations
To help businesses prepare better for future increases in rateable values, Government has proposed to reduce the rating Revaluation period, from five to three years, affecting future Revaluations from 2022 onwards – another step in the right direction.
Rate relief for Pubs
Hammond also announced the extension of the £1,000 business rate relief discount for pubs with a rateable value of less than RV£100,000, which is being extended by a further rate year, to 31st March 2019.
To assist small businesses operating in the City, the Chancellor will also trial 100% business rates retention in London next year.
However, whilst the changes announced in the Autumn Budget represent a move in the right direction when it comes to business rates, we still believe that the Government hasn’t gone far enough.
Alas, the new Check, Challenge, Appeal system in England remains clunky and is overly complicated for ratepayers, despite calls from business and industry alike, to simplify the process.
The negative impact of business rates on business growth and investment cannot be denied, and should not be taken lightly by the Government. In the face of increasing competition online, more needs to be done to protect businesses and retailers, to help them to grow and prosper.
If you would like help or advice in relation to any of the issues discussed in this article, don't hesitate to get in touch with our specialist business rates advice team.