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Business Rates: here we go again!

We have written a lot in the past about the government’s promised review of business rates (see for instance, our newsletter of November, 2020). After general consultation, the govenment eventually issued its final report re England in October, 2021. Business rates are devolved to Scotland, Wales and Northern Ireland’s own government bodies.

In respect of England, the government states its proposals will

  1. Support the high street and reduce the burden of business rates by “providing a tax cut worth about £1.7 billion for eleigible Retail, Hospitality and Leisure properties, for 2022 to 2023”.
  2. Cut the burden of business rates for all businesses by “freezing the multiplier for 2022 to 2023”.
  3. Introduce a new relief to support investment in property improvements.
  4. Introduce new measures to support green investment and the decarbonisation of non-domestic buildings.
  5. Make the system fairer by moving the three-yearly revaluations from 2023.
  6. Invest in the business rates systems to ensure fundamental change by providing £0.5 billion for the Valuation Office Agency (VOA) as part of its spending review.
  7. Provide stability ahead of the 2023 revaluation by “extending Transitional Relief and the Supporting Small Business Scheme for 2022 to 2023”.
  8. Consider the arguments “for and against an Online Sales Tax which, if introduced, would raise revenue to fund business rate reductions. A consultation will be published on an Online Sales Tax shortly”.

However, despite its promise for an extensive review, the government states that “business rates will remain an essential component of the overall basket of business taxes”. The British Property Federation, representing the real estate sector, is disappointed: “the reforms announced to date will not on their own be sufficient to fix the broken business rates system. We still need fundamental reform.” In particular, it calls for a resetting of the multiplier to a fairer rate, abolishing downwards transitioning from the 2023 revaluation and provision of additional relief on empty properties.

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