Given the reception to Kwasi Kwarteng’s disastrous mini-budget not so long ago, It’s easy to see why all eyes are on Jeremy Hunt come the 17th of November when he’s hoping to present a more palatable red box to parliament.
We’re all hoping for something not so earth-shattering from Hunt (even though this full fiscal budget should be larger in scope than its mini-predecessor) as he aims to put a sticking plaster over the UK’s current “black hole” in public funding. But what many business owners are clamouring for is a more robust announcement regarding the current state of business rates, and what's to be expected from them as we move into a new rating period in April 2023.
This is because so far, the writing on the wall looks pretty grim. Business rates in 2023 will be measured against last September's Consumer Prices Index (CPI) which was set at 10.1%.
With no planned relief scheme to speak of, and business rates not set to receive any form of reform moving forward, such a hike is projected to cost rate-payers a further £3bn in bills.
Is this a viable increase for businesses in the current climate? It comes at the same time that many existing relief schemes are set to end for the likes of hospitality, leisure, and retail. The Confederation for British Industry has warned the current rates trajectory poses a “cliff edge” for many businesses, who will struggle to remain viable through the current economic downturn.
With large sectors of the economy reliant on soon-to-end emergency fiscal aid, and customers deserting the high street, surely a fair business rates model is a hard thing to calculate with any accuracy. To compound the problem, the 2023 revaluations are unlikely to reflect the changes to your property which Covid, new systems of production/warehousing, and hybridised working patterns continue to create.
There is, of course, a very difficult decision to make here for Hunt and Sunak. On one hand, the government needs to raise an estimated £50-60bn of funding. But are business rates the place to find it? If the government were to move in the complete opposite direction (call it a u-turn if you like) then business rates reform could help to encourage significant industry investment and economic growth for an impactful and sustainable future.
However, such a decision remains to be seen.
With such an uncertain future ahead for many businesses, it is concerning to think that in the current rating list (2017-2023), We’ve found 1 in 3 business rates bills to be incorrect. Getting your liability readjusted to what it should be can lead to a significant rebate, (backdated to 2017 or when you first moved into the property) while keeping your bill in check as we move closer to the new rating list.
This option ceases to exist entering the new rating list, and the valuation office expects a “bottle-necking” of appeals to occur as we draw closer to April 2023. As such, it is strongly recommended that businesses explore this opportunity before it's too late.