The past few weeks have been an economic bombshell for the UK, with the new mini-budget announcement seeing the pound fall to an all-time low against the dollar. While large banking groups make the unprecedented move to step in and intervene against further financial damage to the economy, it has left many doubting the current course of action that the UK government has decided to take.
Not least of all are business owners, who were hoping for more substantial support amidst the cost of doing business crisis. It was anticipated that the mini-budget would go to some lengths to realise these hopes, with calls for business rates reform high on the agenda. There’s only half a year left of a six-year rating list, and businesses are still in the dark as to what their new rateable value will become in April, making future planning strategy an impossible task.
The lack of any substantial talk on business rates via the recent mini-budget is something that labour were keen to capitalise on. In their recent party conference, promises were made to “abolish” business rates were proclaimed, although finite details on what this would mean for business tax were left undisclosed. From the perspective of a business rates specialist, we’d expect to see the following in any reform to the system:
The eligibility cap for small business rates relief (SBRR) to be raised from £15,000 to £25,000.
Transitional relief to be scrapped as we move into the 2023 revaluation.
For the currently placed relief for the hospitality, leisure, and retail sector to be extended into the next revaluation period.
Raising the SBRR threshold is fairly self-explanatory, but its implementation would place 200,000 SMEs into a relief scheme that would see them paying significantly less business rates than they are currently. It’s an action that many business groups have been calling out for quite some time, as the benefits for businesses are immediate and significant.
Transitional relief is its own separate issue. If included within the 2023 rating list it would see businesses waiting the entire scope of a rating period to benefit from any reductions owed. This is because, under transitional relief, the financial benefit of any reductions to a property's business rates liability is spread throughout the current rating period.
In short, businesses could be waiting years for the financial support that they are owed right now. In the current economic climate, scrapping transitional relief could mean huge, immediate support for businesses when they need it most; right now.
Finally, it’s no secret that customer-facing businesses have had arguably the most difficult run of things over the past few years, with business rates relief packages being front and centre in keeping many businesses afloat. This relief could be due to end in the next rating list as currently, support hasn't been promised to extend.
Take pubs for example, less than half of pubs in the UK currently feel optimistic about their ability to remain open in the future. There are many reasons for this but the majority of pubs have called for a business rates cut to help them continue to operate. If the current relief scheme is swept from under their feet, pubs could face a significant hike in business rates when they’re calling out for exactly the opposite.
As specialists, we’re waiting with bated breath to hear of any update or change to the current business rates system, which we strongly believe needs to happen soon. In the meantime, we can’t stress the importance of ensuring that your business's rates have been correctly assessed ahead of April 2023, when a new rating period will come into effect. Failure to do so will result in any savings your business could be owed this rating period, being lost.