In October's Budget, the second of 2021, Chancellor of the Exchequer, Rishi Sunak, announced several measures he claims will create a “simpler, fairer, and more competitive tax system” for non-domestic properties. The speech was made in conjunction with the publication of the Government’s long-awaited conclusion to the Fundamental Review of Business Rates in England.
Sunak was quick to confirm that business rates will not be abolished, but rather, that upcoming reforms will ensure a fairer and timelier system.
It is apparent that the government has taken on board some of the recommendations made by stakeholders in the Fundamental Review responses, such as reforms to support green investment but has not gone far enough in the Autumn Budget announcement to address a fair burden of rates. Calls for an online sales tax are being treated cautiously, with promises of a consultation on the matter in the near future.
Businesses will be relieved to hear the Chancellor confirm that there will be a freeze in the multiplier for the second year in a row, from 1 April 2022 until 31 March 2023, rather than an increase in line with inflation.
The Chancellor’s announcement covered the following key reforms, reported to amount to a significant £7bn in relief over the next 5 years:
- New Investment Relief from 1 April 2023 until 31 March 2035 to support businesses investing in Green Technology by exempting eligible plant and machinery used in onsite renewable energy generation and storage. 100% relief for eligible heat networks, to support the decarbonisation of non-domestic buildings.
- New Improvement Relief worth £750m giving 12 months’ business rates relief on improvements and expansion to business premises. Government to consult on how best to implement this relief that will take effect from 2023 and be reviewed in 2028.
- 50% discount for eligible retail, hospitality and leisure properties for 2022-23 up to a cap of £110,000 per business. This continues in the vein of the Covid relief but more detail is needed on eligibility.
- As expected, from 2023, there will be more frequent Revaluations, commencing every three years instead of every five. Additional funding to the Valuation Office Agency to support the delivery of the new revaluation cycle was also outlined.
In summary, these are welcome reliefs that go some way to helping all ratepayers, particularly the multiplier freeze. As usual, more details are needed to understand exactly what is up for grabs and how reliefs will be administered. Also, we still need to see the detail concerning how the £1.5bn Covid compensation will be administered for businesses that urgently need it.
For more information, please contact the LSH Rating Team.
*Further commentary on the Final Report of the Fundamental Review of Business Rates in England will be published by our Rating Team soon.
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