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Chancellor

Light relief for beleaguered business ratepayers

24/11/2016

Philip Hammond’s first (and last!) Autumn Statement left the majority of ratepayers spectacularly underwhelmed.

The Chancellor confirmed the Government’s proposals for its transitional relief scheme, which will phase in the changes in business rates liabilities from the 2017 revaluation over a period of up to five years. Ratepayers with a rateable value of more than £100,000 will see the maximum increases in their liabilities reduced from 45% to 42% in 2017/18 and from 50% to 32% the year after – see table 1 below: 

Table 1: Transitional Arrangements 2017 revaluation (before inflation) funded by 3 caps on reductions

Property Size

2017/18

2018/19

2019/20

2020/21

2021/22

Upwards Cap

Small

5.0%

7.5%

10.0%

15.0%

15.0%

Medium

12.5%

17.5%

20.0%

25.0%

25.0%

Large

42.0%

32.0%

49.0%

16.0%

6.0%

Downwards Cap

Small

20.0%

30.0%

35.0%

55.0%

55.0%

Medium

10.0%

15.0%

20.0%

25.0%

25.0%

Large

4.1%

4.6%

5.9%

5.8%

4.8%


Note: these are year on year caps on increases. For instance, the maximum increase for small properties over 5 years would be 64%. But a small property with an increase of 7% would reach their full bill in year 2. Medium is above rateable value £28,000 in London and £20,000 elsewhere. Large is above rateable value £100,000. 

The Small Business Rates Relief package announced in the 2016 Budget - which would double the exemption threshold to a rateable value of up to £12,000 - was confirmed to go ahead from 2017, and the Chancellor also announced that there will be 100% business rates relief on the new fibre infrastructure/networks in order to kick start investment in the new 5G infrastructure. 

The only other specific business rates announcement was a rather underwhelming confirmation that rural rate relief will be increased to 100%. While this could mean savings of up to £2,900 for small businesses in rural areas, it affects only a very small segment of the business community .

In a separate announcement, the government also confirmed it will now reduce the small business non-domestic multiplier from 48.4p 2016/17 to 46.6p in 2017/18, while the national non-domestic multiplier will fall from 49.7p in 2016/17 to 47.9p for 2017/18 – a reduction of 0.1p from what was previously estimated. 

Businesses, with the assistance of their advisors, can now accurately calculate budget estimates for their actual business rates liabilities from 1 April 2017.

Paul Easton, National Head of Business Rates at LSH, commented: “While these changes will undoubtedly offer a modest financial saving for some, they’re hardly significant and nowhere near far reaching enough. More importantly, the Chancellor failed to mention the penal phasing in of reductions in business rate liabilities following the revaluation. 

"More steps need to be taken towards a greater reduction of the significant burden that business rates represent.”

For further information relating to this news article contact 

Contact us now

Paul Easton
Director - National Head of Business Rates

0191 338 8277

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