The Non-Domestic Rating Bill received Royal Assent in Autumn 2023 and has now become the Non-Domestic Rating Act 2023, affecting all occupiers, owners and investors in commercial property.
Some of the changes will fundamentally change the way ratepayers manage their businesses. But what are the changes and what will they mean for business rates payers in 2024? Nigel Katseph, business rates expert at Vail Williams, explores.
Non-Domestic Rating Act 2023
Despite several amendments to the Bill having been tabled and debated, it passed through with just a handful of minor alterations.
Most of the changes enabled by the Act will require regulations to bring them into force, but there were some changes which take immediate effect, that businesses will need to be aware of. Of particular note, is the new Duty to Notify.
New ‘duty to notify’
The introduction of Duty to Notify represents a fundamental change in the way that the rating system in England operates. The Government explained that these measures are required to assist the move to more regular revaluation cycles and will be accompanied by more transparency from the VOA.
Ironically, however, whilst it takes immediate effect, there isn’t a mechanism in place yet, to enable businesses to actually comply with it.
Duty to Notify requires all ratepayers to inform the Valuation Office Agency (VOA) of any changes to their property that they are responsible for within 60 days of the change.
It includes rent/tenure changes, occupation changes, as well as any physical alterations such as extensions, installations of mezzanines or new air conditioning, which will now need to be proactively notified to the VOA by businesses.
In the House of Lords, the Minister stated:
“…[the] Government will not formally activate the VOA duty until we are absolutely satisfied that ratepayers can reasonably and efficiently comply with it through the online service. Guidance and support will be offered to those engaged in the soft launch of the system. As is the purpose of the soft launch, the guidance will be developed as we learn from engagement with users.”
Whilst the VOA has commenced engagement with some main agents and other ratepayer representatives and professional bodies, there is yet to be any commitment from either Government or the VOA on when the new processes and systems will be operational.
Scope of Material Change of Circumstances tightened
Several changes to Material Change of Circumstances (MCC) provisions also take immediate effect.
Significant changes to your property or its surroundings can constitute a Material Change of Circumstance (MCC), which can potentially affect your property’s Rateable Value (RV) and reduce your business rate liability.
However, the scope of MCCs in England have been tightened with immediate effect, so that new legislation, licensing regimes and guidance from public bodies will not now be grounds for a change in Rateable Value (RV) between revaluations.
This reflects Government policy following on from the legislative measures that were taken during the COVID-19 pandemic, removing the ability to argue that coronavirus-related matters were grounds for an MCC appeal.
However, this goes far beyond the scope explained by the Government and is unreasonable and unfair on ratepayers who already face significant business rates burdens.
Unfortunately, attempts to remove this change from the Bill were unsuccessful, and we suspect this will lead to more litigation in the future.
Completion Notices changed
There was a change to completion notice regulations relating to buildings that have been temporarily removed from the rating list during redevelopment / refurbishment but remain unlet.
Completion notices are the mechanism by which a local authority can force a new building to be assessed for rates before it has been occupied.
This means that billing authorities will now be able to issue completion notices in the same way as for a new building – a change which we are advised, will be implemented after two months.
It remains to be seen if local authorities will implement this change as there is, of course, a balance to be sought between increasing business rates revenue versus stifling investment in their area.
Small Business Rate Multiplier Frozen
At the Autumn Statement, we received the welcome news that the business rate multiplier will be frozen at the same rate as this year.
However, unfortunately, the standard multiplier for all medium and large properties will be increased to 54.6p in line with increase in September’s consumer price index (CPI) figure.
Retail Hospitality and Leisure Relief Scheme to continue
It was also pleasing to see confirmation at the Autumn Statement that this year’s 75% relief for retail, leisure and hospitality properties (capped at £110,000 per business), will be continued.
Devil will be in the detail
Whilst the Rating Bill has received Royal Assent, there remains a great deal of uncertainty for business rates payers and, as ever, the devil will be in the detail.
We are expecting a possible announcement on changes to the empty property rates regime, which was anticipated in the Autumn Statement, but didn’t transpire. However, it may do in the future. We await further clarification from Government and the VOA on this, and more, at the start of 2024, at which point we will explain the impact further.
In the meantime, for support with your business rates liability or to explore the potential reliefs or savings opportunities open to you, contact our business rates experts.
