Autumn Statement 2022: Business Rates

Today’s Autumn Statement will provide some short-to-medium term relief for ratepayers seeking certainty while trying to budget for business rates liabilities and plan for the year ahead against the backdrop of a UK recession. The announcement to freeze the uniform business rate multiplier for 2023/24 and the announcement to retain upwards transitional caps alongside the removal of downwards ones allow those facing major increases and decreases to adjust accordingly and to benefit from new tax assessments from 1 April 2023.

Business Rates 1920X1080 Nov 22
Colette Henshaw
Published: 17 Nov 2022 Updated: 17 Nov 2022

It will be welcome news to ratepayers that the uniform business rates multiplier will be frozen at 49.9 pence (small business rate) and 51.2 pence (standard rate) for the 2023/24 rate year. The multiplier, which is pegged to the Consumer Price Index (CPI), would have led to an increase to 52.9 and 54.2 pence respectively for the forthcoming rate year. The multiplier freeze for the 2023/24 rate year offers businesses the certainty they need in the midst of a very uncertain economic picture ahead. It also means that in real terms costs will be 6% lower than they might have been. This immediate action is welcomed but it does also pose questions around the future of the multiplier and whether or not pegging to CPI is in fact a sensible course of action.

The announcement around the transitional relief scheme will be very welcome news for ratepayers seeking to access immediate savings in reduced business rates assessments for the forthcoming 2023 revaluation. It was made clear that 300,000 properties that expect a fall in their rateable values at the 2023 revaluation will see an immediate decrease in their business rates bills from 1 April 2023.

Those who will experience significant increases in rates liabilities at the 2023 revaluation will be relieved that the upwards transition caps will remain. These have been announced as being 5%, 15% and 30%, respectively, for small, medium, and large properties in 2023-24.

The devil remains in the detail around transitional relief and its future. The overriding call from businesses and, in particular, the retail sector to abolish the scheme remains unaddressed.

The British high street and its retailers will be overwhelmingly pleased that today confirmed an extension and increase in the retail, hospitality and leisure (RHL) relief. For 2023/24 the business rate relief will increase from 50% to 75% on up to £110,000 per business. As the cap suggests, it will only apply to those eligible and overlooks those businesses who occupy multiple high street locations and meet the cap quickly. This does respond to the call by stakeholders in the business rates Autumn Review in 2021 to extend the relief, which has led to the exploration of an online sales tax. The Government has, however, decided not to introduce any online sales tax. Large retailers and hospitality will be left wondering if the announced changes go far enough to protect them from the global economic crisis and the change in consumer spending that is expected to come as the cap of £110,000 limits the benefit of the increase and extension.

The final announcement raised in the Autumn Statement was that the intended improvement relief, which seeks to ensure ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they occupy, will now be introduced in 2024 and run to 2028. This delay is unwelcome news as it was intended to commence from 1 April 2023 and means businesses will not be inspired to make intended improvements as soon as planned as there is no benefit from a business rates point of view to do so.

The real picture of business rates savings for the ratepayer as announced in the Autumn Statement is unknown.  The reported £13.6 billion package of savings is championed through the multiplier freeze, the RHL and the transitional caps but it casually ignores the delay of the improvement relief in the real picture of the business rates support and what the impact on savings are to the ratepayer.  The benefit in the extension and increase in the RHL scheme is reduced by the delay in introducing the improvement relief scheme. In an uncertain time ahead it is positive that some element of certainty is provided for 2023/24 and it is clear that businesses need to plan in good time to understand their position to capitalise on eligible reliefs and where opportunities lie to challenge assessments.

Autumn Statement 2022

Analysis and commentary from the experts at Evelyn Partners, identifying the key tax changes and outlining the practical implications for you and your business.