The Valuation Office Agency (VOA) recently released the Business rates revaluation 2023, detailing how UK business rates are calculated and what business owners can expect from April 1st, 2023. Despite skepticism from some business leaders, the Chancellor acknowledged the challenges that UK business rates pose, especially given the predicted 12% increase in the next revaluation. The Chancellor went on to state that the total increase in Rateable values (RV) would be no more than 1%, which some have found unbelievable.
Although the government has committed to a business rates package of almost £14 billion to help alleviate the burden of UK business rates, some are not convinced that it will be enough. Most of this support package is attributed to freezing the business rates multiplier, which is worth £9 billion over the next five years. While freezing the multiplier may seem like a decisive action to mitigate soaring costs, there is a hidden increase that could cause damage to businesses.
The VOA's website shows some startling figures, but the full table paints a much grimmer picture. For instance, Large Industrial properties will see their RV increase by as much as 17.2% but the industrial sector overall is expected to increase by over 27%. The office sector will see an average overall increase of 10.2%. Even local authority schools, day nurseries, and play schools will see an increase in their RV of almost 18% and 15%, respectively.
In reality, individual industries and local authority areas are likely to see jumps in RV of around 14%, with some industries predicted to see increases of up to 30%. With rates bills now arriving, business rate payers may struggle to mitigate some of the damage caused by the 2023 rating list.
As business owners, we expect taxes to be calculated fairly and correctly. Unfortunately, mistakes can be made, especially when it comes to business rates liability. The Valuation Office Agency (VOA) determines the rateable value (RV) for commercial properties, which in turn determines the amount of business rates liability. However, if even one room of a commercial property is incorrectly assessed, the liability for the entire property could be exponentially more than it should be.
The 2023 draft rating list was only released in November 2022, significantly delaying business owners' and leaders' ability to create an accurate financial plan for the upcoming revaluation. In October 2022, the Office for National Statistics found that over 40% of firms had no or limited cash reserves for the subsequent three months, which is unsustainable when paired with the incoming business rates hike in April.
Commercial property owners and tenants must investigate their business rates now. If even one measurement or piece of evidence is incorrect or missing, the VOA could dismiss the whole case. It is imperative to act before the 31st of March, as any backdated savings from the 2017 rating list cannot be claimed after that date. Business rates as a tax are becoming increasingly unaffordable for commercial property owners and tenants, and action must be taken to ensure a fair and transparent system.