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Autumn Statement: What do the business rates announcements mean for your business?

Whilst Jeremy Hunt did not have much cash to giveaway in his Autumn Statement, he did make a point of trying to soften the impact of the business rates revaluation in April next year. In particular, these tax reductions are designed to support smaller businesses on the high street and those engaged in hospitality.

Business rates can be a significant overhead for many businesses. Given the cost pressures being experienced by many businesses, £13.6 billion of support has been announced to help those facing new business rate bills following the revaluation of their properties. Without these measures some would have faced significant rate rises from April 2023.

What were the key announcements on business rates?

From 1 April 2023 business rate bills in England will be updated to reflect changes in property values since the last revaluation in 2017. This will be based on property values from 1 April 2021. Support announced today includes:

• Targeted support over 5 years to support businesses as they transition to their new bills. This particularly focuses on retail, hospitality and support for the high street

• The business rates multiplier will be frozen at their current levels rather than increased further as originally planned

• A transitional relief scheme will provide support by capping bill increases. The upward caps will be 5%, 15% and 30% for small, medium and large properties in 2023/24

• 300,000 properties are estimated to see falls in rateable values and these will be seen in full rather than being capped

• Retail, hospitality and leisure relief – this is being extended and increased from 50% to 75% relief up to £110,000 per business in 2023/24. It is estimated this will support around 230,000 such properties

• Bill increases for the smallest businesses losing eligibility or seeing reductions in certain reliefs will be capped at £600 per year from 1 April 2023. So any such small business should not see a bill increase of more than £50 per month during 2023/24. This will be a limit of £150 a year for eligible retail, hospitality and leisure businesses

• The promised ‘improvement relief’, which ensures that ratepayers do not see a rate increase for 12 months as a result of making qualifying improvements to property they occupy, will now be introduced from April 2024

How could my business be impacted?

A typical small shop with a rateable value increase from £20,000 in 2017 to £21,500 in 2023 will receive relief worth around £8,000 (subject to £110,000 cap per business).

A typical pub with a rateable value decreasing from £31,900 in 2017 to £27,600 in 2023 will receive relief worth over £10,300 (subject to the £110,000 cap per business).

The aim is that physical shops on the high street, who are seeing a fall in income, will get the full reduction in the transitional relief reforms but online marketplace warehouses will pay higher bills as a result of the revaluation.

Ratepayers in England can get an estimate of what their business rates may be from 1 April 2023 through the Find a business rates valuation service.

What happened to business rates reform?

A ‘final review’ into business rates was published in October 2021 following a period of consultation. This clarified the Government’s plan to bring forward substantive changes to the system rather than ripping the system apart and staring afresh. The review of business rates reform originally promised to assist businesses with their rising bills, particularly after the impact of Covid, however assistance has been announced today in light of the economic situation.

One idea considered and recently consulted upon was an online sales tax as this could be used to rebalance the business rates bills paid by in-store retailers in comparison to their online counterparts. However, a decision has been made not to introduce an online sales tax and it appears business rates are here to stay, with a focus on more frequent revaluations and encouraging green initiatives.

We would expect similar measures to be implemented in the devolved nations although that is a matter for those countries.

For more analysis, visit our Autumn Statement hub.

FEATURING: Heather Britton
Heather specialises in providing tax advice to companies and their directors/shareholders, as well as unincorporated businesses and property owners. She enjoys providing practical tax solutions,… read more
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