The Autumn Statement set out a package of targeted support to help with business rates costs worth £13.6bn over the next five years
The business rates multipliers will be frozen in 2023-24, and upward transitional relief caps will provide support to ratepayers facing large bill increases following the revaluation.
From 1 April 2023, business rate bills in England will be updated to reflect changes in property values since the last revaluation in 2017.
The relief for retail, hospitality and leisure sectors will be extended and increased, and there will be additional support for small businesses.
Upwards transitional relief will support properties by capping bill increases caused by changes in rateable values at the 2023 revaluation. This £1.6bn of support will be funded by the Exchequer rather than by limiting bill decreases, as at previous revaluations.
The ‘upward caps’ will be 5%, 15% and 30%, respectively, for small, medium, and large properties in 2023-24, and will be applied before any other reliefs or supplements.
The 300,000 properties with falls in rateable values will see the full benefit of that reduction in their new business rates bill from April 2023.
Over the life of the three-year list the scheme will support around 700,000 ratepayers.
Support for eligible retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% business rates relief up to £110,000 per business in 2023-24. Around 230,000 properties will be eligible to receive this increased support worth £2.1bn.
Rates increases for the smallest businesses losing eligibility or seeing reductions in small business rate relief (SBRR) or rural rate relief (RRR) will be capped at £600 per year from 1 April 2023. This is support worth over £500 million over the next three years and will protect over 80,000 small businesses who are losing some or all eligibility for relief.
This means no small business losing eligibility for SBRR or RRR will see a bill increase of more than £50 per month in 2023-24.
At Autumn Budget 2021 the government announced a new improvement relief to ensure ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they occupy. This will now be introduced from April 2024. This relief will be available until 2028, at which point the government will review the measure.
Gerry Biddle, business rates lead at Deloitte, said: ‘The Chancellor’s package of benefits for business rate payers was surprisingly generous, amounting to savings of £14bn over next five years.
‘Hospitality, leisure and retail businesses will benefit from a further freeze of the current 50% relief before it increases to 75% with effect from 1 April 2023. It will be available for 12 months, capped at £110,000 relief per business.
‘A typical retailer occupying a unit of £60,000 rateable value will save £7,500 in the 12 months from 1 April 2023.’
Online sales tax abandoned
The government has also announced that it will not go ahead with the online sales tax due to its complexity.
The idea of an online sales tax was put forward by certain stakeholders to ‘rebalance’ the business rates bills paid by in-store retailers in comparison to their online counterparts.
The government’s decision reflects concerns raised about the complexity of the proposed tax and the risk of creating unintended distortion or unfair outcomes between different business models. Stakeholders also expected it would lead to higher prices for consumers.
‘Bringing in a brand new tax to remedy perceived unfairness in the business rates regime would have been a disproportionate way of addressing the challenges facing the high street,’ said the Chartered Institute of Taxation.
‘Introducing a tax that required all transactions to be deemed in or out of its scope, especially where borderlines exist such as goods versus services, business versus private consumers, and the nature of any exemptions or special rules, would have been hugely complex.
‘It has always been our view that online sales tax should not be seen as an alternative to wider business rates reform.’