Changes to business rates reform, including new reliefs

Business rates have been under review by the government for some time. It announced back in February that its final report would arrive in the autumn of 2021, when there would be more economic certainty.

Although “cautious optimism” is probably more appropriate to describe the current mood, the outcome of a consultation into a reform of business rates has now been published. Although the changes announced are not as fundamental as many of the ideas that were being considered to modernise the system, if you are a business owner – or plan to become one – this is what you need to know:

Business rates to move to three-yearly revaluations

The next revaluation will take effect in 2023, to reflect property prices in 2021. This is the first revaluation for business rates since 2015, and the aim is that the new, three-year cycle will more accurately reflect changes to a property’s value.

Alongside this will be new filing and reporting obligations, phased in from 2023, for those who pay business rates in respect of things like the character and occupancy of the property, also information on rent and leases.

From 2026, if you want to appeal a revaluation, this will be simplified – for example, a three-month time limit will be applied for challenges. The Valuation Office must then resolve a challenge, by law, before the next valuation.

Will the increase in liabilities for business rates discourage owners from making any improvement(s)? The government is proposing to implement an improvement relief, of 100% relief from higher business rates bills, for the 12 months following the improvement(s). It should be noted that this is subject to consultation, and there is still scant detail. There will also be a consultation to gather views about the possible introduction of an online sales tax.

Recovering from the pandemic

With many businesses still very much in a recovery phase, the multipliers used by the government to calculate business rates liabilities are to be frozen until March 2023.

If your business is in England, and a revaluation has made it subject to increased business rates liabilities, the impact can be mitigated with a transitional relief. This will be extended until the end of March 2023. For properties with a rateable value of up to £20,000, the bill increase will be limited to 15%; for properties with a rateable value of between £20,000 and £100,000, the increase will be limited to 25% and 6% for properties with a rateable value of more than £100,000. Whether transitional relief will continue after 2023, will be subject to consultation.

Support for going green

To incentivise green investment by reducing a business’s carbon footprint, there will be a new relief to exempt any plant and machinery used for onsite generation and storage of renewable energy, such as solar panels.

If you want to be sure you’re getting the most out of your business, at Figurit we provide professional tax compliance, business planning and chartered accountancy services. We will work alongside you to help you achieve your goals! To find out how business rates reform could impact on you in the future, get in touch today.

For help with business or personal tax planning, call Figurit (formerly known as Lansdell & Rose) on 020 7376 933 or complete the form below.

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