Chancellor of the Exchequer Philip Hammond announced £435m of support for some of the businesses who will be hit hard by the revaluation in April and a pledge to improve the process ahead of the next revaluation in 2022.
Three measures were announced as part of the fund to alleviate some of the strain facing businesses as the new rating list comes into force in April:
- Small businesses losing Small Business Rate Relief will have a maximum of £50 extra to pay a month in business rates
- Local authorities will receive £300m to provide discretionary relief to individual hard cases
- Pubs with a rateable value of up to £100,000 will receive a £1,000 business rates discount for one year from April – subject to state aid limits for businesses with multiple properties
The Budget promises to fully compensate local government for any income losses as a result of these measures.
The government will be looking at reforming the revaluation process in order to make it more frequent and efficient, and consultations will take place before the next revaluation in 2022. Hammond will set out his approach for increasing the frequency of revaluations to at least every three years in the Autumn Budget.
As part of the government agenda to hammer down on tax gaps, plans to amend legislation were announced to ensure all profits from development on UK land by offshore property developers are taxed.
Also announced was a delay in the reduction in the Stamp Duty Land Tax filing and payment window from 30 days to 14 days until 2018/19.
Adam Burke, director of rating at Colliers International, commenting, said: “The Chancellor’s Budget announcement on business rates is too little, too late. It is not the ‘Budget for business’ that the Chancellor wants us to believe, all the time he proposes swingeing rates’ increases for thousands of firms. Yes, for small businesses coming out of Small Business Rate Relief, this Budget will offer an olive branch, but will not delay the inevitable increases coming down the road.
“We are still awaiting the Government’s response on the last review on business rates reform. Yet another review, announced today, into business rates is a waste of time and money. It is absolutely clear that more frequent revaluations – even, three-yearly – would go a very long way to improve the current system.”
“With around 326 local authorities in England, the Chancellor’s ‘discretionary fund’ means just £990,000 per council to offer relief to businesses over five years. This is clearly a paltry amount given the Government has caused these staggering increases itself.
Paul Easton, national head of business rates at Lambert Smith Hampton, said: “There have been increasingly loud calls in the press for the Chancellor to help businesses and protect them from business rates increases due to the 2017 revaluation. Listening and responding he announced that small businesses will benefit from this budget, but the measures he has announced are a bit of a damp squib.
“These measures are certainly welcome but there’s no help for many businesses facing big increases in their business rates. Nor any help for those who were hoping for reduced rates bills over and above what we already know. The pain will continue.”
Noam Handler, head of tax in the North West at EY, said: “Business rates featured today in a budget with very few tax changes, but even here the changes were small and focused on the smaller business community.
“These changes will be welcome by those receiving them, but they still don’t address the underlying tax hike – from the 41.4% rate imposed at the last valuation to the 48% rate coming into force in April. Large businesses, which have had little help in either this or the last Budget, still face some of the highest property taxes in Europe. Given that business rates are paid even before a single pound of profit is made, this can act as a real deterrent to UK investment.
“So those pint-pulling publicans may well be happy, but online shoppers have been warned. As for larger businesses, in was another dry Budget.”
Liz Draycott, senior chartered surveyor at Legat Owen, said: “Given the £25bn+ revenue generated by business rates, the £435m relief package is really insignificant especially when businesses across the country are crying out for support, particularly in the retail sector. The measures seem to fly in the face of government desire to grow business in the UK and doesn’t do enough to support those hardest hit by tax hikes.
“In reality there has been very little change for business rates and no comment made about further retail reliefs so desperately demanded by many retail groups and property organisations up and down the country.”
Conrad O’Neill, director of Canning O’Neill: “The measures to help small businesses and pubs are welcome but nothing has been done, or is ever likely to be done, about the North/South gap that exists in the business rates world. The Revaluation was postponed from 2015 to 2017. This was to protect businesses in the South East, where rents had increased, from business rates rises, but served to keep business rates in the rest of the country, and in particular the North, where rents had decreased, at artificially high values – so business rates payers in the North have been subsidising business rates payers in the South for two years.
“On Revaluations, the Government implements transitional relief – which phases in increases in rates bills so businesses are not faced with immediate steep increases. What many may not appreciate is that transitional relief also applies to decreases in rates bills. So the South East will have their long overdue increases phased in and the North will have their long overdue decreases phased in – so the North will continue to subsidise the South East for a few more years to come.”