With significant changes to business rates in the pipeline, Danny George, partner at property consultancy and Thames Tap partner, Vail Williams LLP, looks at what can be expected.
Following last month’s election result, there is clearly a great deal to be achieved by Government over the coming months.
Indeed, as well as delivering on Brexit and several other big domestic issues, an announcement in the Queen’s Speech suggests the Government has found time and funding to support our business community through some improvements to business rates.
At last, some positive news!
What is changing?
Retail discount, or retail relief, was introduced in 2019/20 for ‘qualifying’ ratepayers who provide retail goods or services. It will be increased from a 33.3 per cent discount, to 50 per cent for 2020/21.
This represents a significant opportunity for SMEs and has clearly been brought in with a view to alleviating some of the pressures on our high streets.
But, what about the wider business community who will not benefit from this retail discount?
They have not been forgotten and the Government has decided to bring forward the next national revaluation to April 2021, reducing the 2021 list from five to three years.
This is in response to calls for more frequent revaluations which mirror economic cycles and fluctuation in rental values, following criticism of the traditional revaluation cycle.
The prospect of a fundamental review
As we approach 2021, we may also see further announcements – perhaps even some additional relief packages.
The Government has even pledged to undertake a ‘fundamental review’ of the whole business rates system – again a positive message.
But the key word here is ‘review’. What will this mean in practice and is it the same as delivering practical change?
With the Government facing what are arguably more pressing issues, including Brexit, is fundamental change to the business rates system realistic within the next 15 months?
Only time will tell, and the reality is that business rates are a large source of revenue and any fundamental changes to the system will, of course, have wider implications for the Treasury.
In the meantime, it is possible to improve the system we already have – be it through easier access for ratepayers to challenge their assessment, transparency around evidence or a well-funded and well-supported Valuation Office Agency (VOA) whose officers simply want to do a good job.
But in doing so, any changes made by Government risk making a system, which is already complex to navigate, even more so.
We await the Government’s ‘review’ with interest.
In the meantime, businesses should continue to ensure their current 2017 Rating List Assessment has been reviewed and, for those who qualify for retail rate relief, ensure that this is investigated.
For more information contact Vail Williams.