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  • Writer's pictureDaria Gavrilova

The Impact of Labour's Proposed Changes on Business Rates

The recent discussions at the 24th National CPT Rating Conference have revealed significant changes proposed by Labour that could profoundly impact small businesses across the UK. With the abolition of Small Business Rates Relief (SBRR) and Charity Relief, approximately 740,000 businesses currently benefiting from SBRR will face unprecedented costs.


 Understanding Small Business Rates Relief


Small Business Rates Relief has been a crucial support mechanism for small businesses, helping to reduce their financial burden by lowering business rates. As it stands, around 1.25 million commercial properties in the UK have a rateable value under £15,000. These properties, and the businesses operating within them, have relied on this relief to maintain their economic viability and growth.


The relief typically reduces or eliminates the amount of business rates payable on smaller properties. For many businesses, this has meant the difference between survival and closure, especially during economically challenging times.


 Key Changes Under Labour's Proposals


The proposed abolition of SBRR and Charity Relief forms part of a broader set of changes designed to overhaul the current business rates system. Here are the primary adjustments:


1. Uniform Business Rate (UBR) Adjustments:

    - Properties with a rateable value above £15,000 will now face a standard UBR of 50%.

    - Properties below this threshold will see a UBR of 20%.

    - Charities and retail properties will have a UBR set at 30%, irrespective of their rateable value.


2. Removal of Reliefs:

    - Small Business Rates Relief: Complete abolition means that many businesses that previously paid little to no rates will now be required to pay the full amount.

    - Charity Relief: This relief will also be abolished, affecting many charitable organisations that have benefited from reduced rates.


3. Empty Property Relief:

    - A new structure will be introduced where empty properties receive 100% relief for the first 12 months, followed by a reduced 50% relief thereafter.

    - No intermittent occupation will be allowed to reset the relief period.


How Much Will Businesses Pay?

To determine the amount businesses will pay under the new Uniform Business Rate (UBR) adjustments, we need to calculate the business rates payable based on the proposed UBR percentages.


Here's how the calculations might work for different types of properties under the proposed UBR adjustments:


1. Properties with a Rateable Value Above £15,000


For properties with a rateable value above £15,000, the UBR is set at 50%.

For example, if a property has a rateable value of £20,000:

Business Rates Payable=£20,000×0.50=£10,000


2. Properties with a Rateable Value Below £15,000


For properties with a rateable value below £15,000, the UBR is set at 20%.

For example, if a property has a rateable value of £10,000:

Business Rates Payable in future=£10,000×0.20=£2,000


3. Charities and Retail Properties

Charities and retail properties will have a UBR set at 30%, regardless of their rateable value.

For example, if a charity property has a rateable value of £12,000:

Business Rates Payable=£12,000×0.30=£3,6000


If a retail property has a rateable value of £25,000:

Business Rates Payable=£25,000×0.30=£7,500


 Potential Consequences for Small Businesses


The abolition of SBRR and Charity Relief represents a significant financial challenge for many small businesses. Without this relief, businesses with rateable values under £15,000, which previously paid minimal rates, will now face substantial increases. This sudden financial burden could result in severe cash flow issues, potentially leading to business closures, especially for those already operating on thin margins.


 The Role of Commercial Property Advisors (CPA)


In light of these proposed changes, the role of business rates specialists like Commercial Property Advisors (CPA) becomes even more critical. CPA's expertise in navigating the complexities of business rates can provide essential support for businesses facing these new challenges. With a proven track record of achieving significant savings for clients and operating on a no win, no fee basis, CPA is well-positioned to assist businesses in mitigating the impact of these changes.


CPA's approach includes:


- Comprehensive Reviews: Conducting thorough reviews of properties to identify any inaccuracies in rateable values and potential grounds for appeal.

- Expert Guidance: Offering professional advice and support to businesses navigating the new landscape of business rates.

- Personalised Service: Each client is assigned a dedicated account manager, ensuring consistent communication and tailored advice.


 Moving Forward


The proposed abolition of Small Business Rates Relief and other changes mark a significant shift in the business rates landscape. For the approximately 740,000 businesses currently benefiting from SBRR, these changes could introduce new financial pressures and challenges. Engaging with professional advisors like CPA can provide crucial support and potentially mitigate some of the adverse effects of these policy changes.


As these proposals move forward, it will be vital for businesses to stay informed and proactive in managing their business rates liabilities. The upcoming changes underscore the importance of expert guidance in ensuring businesses can adapt and thrive in a rapidly evolving economic environment.






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