Emergency Budget – what is likely to happen to business rates?

We’re now less than three months away from the release of the draft 2023 rating list which will inevitably create some headline-grabbing increases and decreases. Businesses are already facing dramatic energy price increases and a further business rates hike could put even more pressure on finances.

There has recently been some claims that rates liability across the country will increase dramatically but, as a rule of thumb, industrials will increase, anything retail will decrease and offices will be very dependent on age, location and quality.

What will happen to transitional relief?

Transitional relief is designed to phase in any increases or decreases in liability over a number of years, so those with RV increases don’t bear the full brunt of a cost increase but those with decreases also don’t see the full benefit.

It’s great if you occupy an industrial property where the RV has doubled, but not great if you’re a retailer who needs their rates liability to plummet. The outcome of the recent consultation hasn’t yet been released so we’re still in the dark. There have been several stories in the press about increased liability due to higher RVs but no mention of the multiplier – the pence in the pound paid, which is predicted to drop. That doesn’t make for good headlines though.

Here we go again?

Prime Minister Truss has already announced an emergency budget later this month and I wouldn’t be entirely surprised if the 2023 revaluation is deferred until energy bills and inflation have settled down. It’s been done before, several times; the 2015 revaluation was postponed for two years and the 2021 revaluation postponed to 2023.

In each of those instances, a new rating list was prepared based on a revised valuation date but we’re now so close to 2023 list release that all of the work has been completed. Will the government postpone and start from scratch? I suspect not – the wasted time, cost and resources would be immense.

Something has to give though and deferring the revaluation is an easy target. If the revaluation is deferred then expanded Retail Discount will need to continue and surely the cap must increase above the current £110,000 per business.

The government has taken a battering lately and the introduction of a new rating list with substantial increases on top of everything else is unlikely to improve their standing in the opinion polls.

Meanwhile, another farce rumbles on

The Covid Additional Relief Fund continues to limp along in the background. This £1.5bn fund was designed to provide support to businesses affected by Covid but who hadn’t already benefited from targeted relief. It’s a great concept but it was tripped up by allowing local councils to set their own criteria and processes. Circa 50% of all billing authorities just awarded relief without an application whilst others have an application process so prohibitive that the relief hasn’t be claimed. As at the end of June only 55% of the fund had been awarded and the window for applying has now closed. It’s manifestly failed to deliver the intended support across almost half of the country.