1st November 2024 - James Burkitt

We've all been nervously waiting for the announcements within the Autumn Budget relating to business rates and we've summarised the key changes in this article.

Levelling the playing field

In our last article, Business Rates Reform, we outlined how the retail sector has been lobbying for change and Rachel Reeves confirmed a long-term commitment. This comes in the form of adopting a permanent lower multiplier for retail and leisure properties from 1st April 2026. To make sure the tax cut is fiscally sustainable, the government intends to fund this measure through a higher multiplier for the most valuable properties (i.e. with a Rateable Value of £500,000 or higher). The assumption is that most distribution type properties would fall above this value and therefore looks to fulfil Labour's manifesto promise of levelling the playing field between online giants and high street businesses.

Multiplier 2025/26

As expected, the multiplier for properties with Rateable Values below £51,000 will remain at 49.9p in the pound and for properties with Rateable Values of £51,000 and higher the multiplier will increase in line with inflation which equates to a rise to 55.5p in the pound from the existing 54.6p.

Retail, Hospitality & Leisure Relief

In the short term however retail properties will see an increase in their bills, Retail Hospitality and Leisure Relief will be reduced from 75% for the 2024/25 billing year to 40% for the 2025/26 billing year (capped at £110,000 per annum per business with a rolling 3 year cap of £315,000). Whilst this will have limited impact on larger portfolios, for smaller independents it will significantly increase their annual business rates liability e.g. an independent pub with a 2023 Rateable Value of £40,000 would see an eye watering 63% increase in their annual business rates liability. The recent lobbying from retail and leisure businesses therefore looks to have fallen on deaf ears.

Duty to Notify

From 1st April 2026 we were expecting that each ratepayer in England & Wales (this would include circa 700,000 of ratepayers who currently pay no business rates at all due to being in receipt of business rates reliefs), to be required to complete an annual return confirming changes that have occurred at their property along with the proposed 'Duty to Notify'. This duty would require ratepayers to update the Valuation Office Agency of any changes to their rent, trade or anything that could impact their Rateable Value - an onerous obligation to say the least.

Good news that the Government have confirmed that "due to system-wide complexity of implementing these reforms" the new duties will effectively be voluntary until the official rollout in April 2029.

Conclusion

Whilst there have been clear losers in recent announcements, including Private Schools (losing Charitable relief) and smaller retail & leisure businesses (losing much of their Retail Relief), there haven't been any significant surprises in this Autumn Budget.

Whilst there may be more changes on the horizon, these are likely to happen more gradually than first expected whilst the new Government grapple with reforming a very efficient tax base.

If you would like your say on what you think should happen with business rates going forward, you can get in touch with the Government here (by 15th November 2024): This email address is being protected from spambots. You need JavaScript enabled to view it.