Budget and business rates – something to talk about at least
After quite a few damp squib budgets when it came to business rates, this time around at least there was something to talk about.
There were four headline points that even some of the national press felt worthy of reporting on:
1. It was one of the worst kept secrets of this budget, but the Chancellor did announce that he had been “listening” and was therefore bringing forward to 1 April 2018 the planned switch in indexation of the Uniform Business Rate from RPI to the main measure of inflation CPI. It will give a little respite for business ratepayers but there is no real decrease in the overall burden of business rates which some had hoped for.
2. Legislating retrospectively to address the so-called “staircase tax”. Affected businesses will now be able to request the Valuation Office Agency (VOA) to recalculate their valuations. The “staircase tax” came about following the Supreme Court decision in Woolway (VO) v Mazars LLP. Effectively it meant that separate rating assessments for a large number of properties that had previously been calculated a single assessment were now deemed separate entities, depending on whether they were accessed by a private staircase/corridor or a communal one. The fall-out from this ruling was pretty extensive and those affected – some estimated up to 30,000 businesses – have been very vocal about the unfairness of it all, particularly as the bills were being backdated.
3. Hammond also served up a small glass of cheer to publicans by continuing the £1,000 business rate discount for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties. That extension is for one year from 1 April 2018; welcome but it can hardly be seen as a large enough measure in itself to stem the tide of public house closures.
4. Last, but by no means least, we are going to see an increase in the frequency of rating revaluations – moving to revaluations every three years after the next revaluation, currently due in 2022. To enable this, ratepayers will be required to do more to provide regular information to the Valuation Office Agency on details relevant to valuations such as current rent. More frequent revaluations are broadly welcome so we can all see a more frequent rebalancing of the tax base without it being too onerous – but ratepayers obliged to do more to assist the collection of taxes – isn’t that asking the poacher to help the gamekeeper to load his gun?
So, four changes for business rates – 2 were pre-leaked to such an extent they couldn’t be classed as news, another tries to annul the fallout from a Supreme Court ruling and the last gives some beleaguered publicans another year in which to try and salvage their livelihoods.
Unfortunately, it goes nowhere near enough to tackle the overall complexity of business rates, offer more support for the VOA which is under an immense strain right now, or ease the immensely high level of tax being paid in business rates every year.
Calls are mounting for the supermarket giants to hand back their business rates windfall after seeing profits leap during lockdown.
The Scottish Government is warming up businesses north of the border for changes to business rates come April next year.
Every penny that stays in the till counts right now and there could still be opportunities to save significant sums, if you know the right questions to ask.