In light of the continued economic uncertainty caused by the pandemic, the Government has also announced new reliefs for the retail, hospitality and leisure sectors, but has regrettably continued to provide no meaningful support for the other sectors of the economy. In fact, it is continuing to legislate to remove appeal rights for these sectors to prevent them obtaining their rates refund. In March, the Government had announced a £1.5 billion support package to compensate, but seven months later, there are still no details surrounding this. 

Although the Government stated last week that there would be no response to the fundamental review of business rates as originally planned, it subsequently issued the response within the budget documents. This bulletin will cover both the Autumn Budget and the Business Rates Review Final Report.

Autumn Statement

No Increase in 2022/23 Business Rates
Under the statutory provisions, Business Rates are normally subject to an increase based on the September Consumer Price Index (CPI). In light of the surge in inflation as a result of the recovering economy, inflation has soared, with 3.1% recorded for September. The cancellation of this increase will mean the business rates multipliers will remain at 49.9p and 51.2p.

50% Relief for Eligible Retail, Hospitality & Leisure Sector
Up to 400,000 retail, hospitality and leisure properties will be eligible for 50% reduction in their 2022/23 business rates charge. This will be subject to a £110,000 cap per business and not per property, which is similar to this year’s relief where the cap was £105,000 unless the business occupied a property which was required to close under the law and guidance on 05/01/2021. Although details have yet to be published, Government have stated that it will include Hotels, Gyms and Bowling Businesses.

Extension of Transitional Relief to SMEs
As a result of the postponement of the next revaluation to 2023, there is no statutory provision to allow businesses that currently benefit from transitional relief to have next year. This will now be applied to 2022/23, with bills restricted to 15% for small properties (up to a rateable value of £20,000 or £28,000 in Greater London) and 25% for medium properties (up to a rateable value of £100,000) subject to subsidy controls. 

Relief for Qualifying Improvements to Property
From 1st April 2023, businesses that make improvements to their premises which enhance productivity and support net zero targets of decarbonisation will not have any increase in their business rates for a period of 12 months after completion.  There is currently no mention of a cap on the amount, and examples of eligible improvements include expanding a factory or adding more rooms to a hotel. This scheme is set to be reviewed in 2028.

Relief for Eligible Renewable Plant & Machinery
From 1st April 2023, businesses that have eligible plant and machinery on their premises (used for renewable energy generation and battery storage) will no longer be charged rates on these items.  Further examples mentioned include rooftop solar panels, wind turbines and electric vehicle charging points. The relief is set to last until 1st April 2035.

Relief for Low-Carbon Heat Networks
From 1st April 2023, eligible low-carbon heat networks that have their own rates bill will be exempt.

Business Rates Reforms

In a similar vein to the budget, the Government's proposals for business rates reform lack the important underlying detail to fully understand how businesses will be affected - and in some cases, whether the measures will be draconian or ‘light touch’ as suggested in their report. The broad changes are summarised below, and we will be issuing further advice through our platforms as and when it becomes known.

Move to 3-year revaluations
Currently, the revaluation cycle has varied from 6 to 7 years, which means that businesses are not paying rates based on the market rental values of their respective properties, which is the underlying basis of this tax. To address this, the next revaluation cycle will be for a shorter three-year period which will align the tax more closely with the market. This is welcome news and will come into force on 1st April 2023.

Duty to Notify
Businesses will have a duty to notify the Valuation Office Agency [VOA] of any changes to the physical characteristics of their property or if they cease to be the ratepayer. This duty is likely to be subject to strict time limits with penalties imposed for non-compliance.

Annual Confirmation
Businesses will also be required to confirm annually that the records held online by the VOA for their respective assessment(s) are correct. Failure to comply could result in not only having a penalty imposed, but also the right to challenge the assessment suspended.

Limited Right to Challenge Assessment
In one of the most perceptively draconian measures, businesses will only have a 3-month window to lodge a challenge. This will be either from the start of the rating list or for 3 months after they become the ratepayer. Under the current legislation, a challenge requires a detailed case to be submitted which would not be in the capability of most ratepayers.

Equally, as there are a limited supply of rating practitioners for such a significant demand this will inevitably cause costs to rise for businesses. It is hoped that the Government will make pragmatic changes to this proposal before the planned introduction on 1st April 2026.

Should you require further clarification, guidance or support please contact our Business Rates Team