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.’

UK business groups have described the Bank of England’s interest rate rise as ‘ill timed’ as it will only pile on more pressure to SMEs already struggling with debt repayment burdens

The Federation of Small Businesses (FSB) and the British Chamber of Commerce (BCC) have both expressed concern over the announcement from the Bank of England (BoE) yesterday, which increased interest rates to 0.75%.

The groups stated that the move will mean higher debt costs for many businesses as they try to continue to fight through the economic consequences of the pandemic with the BCC stating that the move was ‘ill-timed against a backdrop of growing domestic and global headwinds’.

In a statement released by the FSB, national chair Martin McTague stated that SMEs were being constantly ‘undermined by a vicious cycle of rising costs’ as they try to make up for the time lost over the last two years of the Covid-19 pandemic.

The BCC stated that while interest rates remain low ‘by historic standards’ the latest rise will be viewed by many as a further step in the ‘prolonged period of aggressive monetary tightening’ at a time when consumers and businesses are struggling as increasing the interest rate will do ‘little to curb the global causes behind this inflationary surge’.

The BCC added that the move will only ‘damage confidence’ and ‘deepen the financial squeeze on consumers and businesses.

In a statement released by the FSB, McTague said: ‘A lot of small firms have had no choice but to increase prices in response, but this isn’t always an option, especially in sectors still trying to entice customers back, such as hospitality and tourism, and their suppliers.

‘At the same time, consumer confidence has plunged and the cost-of-living squeeze has intensified, with record fuel prices and sky-high utility bills meaning loss of disposable income.

‘Small businesses increasingly feel that the Government is indifferent to the cost pressures they face.

‘The planned hikes to national insurance and dividend taxation taking effect in a matter of days, alongside an income tax threshold freeze, will, for many, be the final straw.’

Both the FSB and the BCC have urged the Chancellor to consider this when he releases his Spring Statement next week with the BCC stating that it is vital for the Chancellor to priorities ‘the escalating cost of doing business’.

The BCC called on the Chancellor to delay the National Insurance Increase (NIC) and to introduce a temporary energy price cap for small businesses.

Suren Thiru, head of economics, at the BCC: ‘This would give firms the headroom to keep a lid on prices, protect jobs and make an investment that is so vital to sustaining our economic prospects.’

As well as support for rising energy costs, the FSB calls for an increase in the Employment Allowance and a rise in the business rates relief threshold on rates.

The FSB also stated a ‘pay as you grow’ option on other state-loan-backed schemes to allow businesses to spread the pressure of their debt repayments.

McTague concluded: ‘We urgently need to see the Chancellor ease the pressure on the five and a half million small firms and sole traders on which our recovery will depend.’