23rd November 2017

Budget holds three important policy measures for business rates payers

In his first Autumn Budget yesterday, the Chancellor unveiled three important policy changes which will offer some overdue relief to those who pay business rates, says Alder King business rates partner Alan Morrish.

The measure that secured the most headlines was bringing forward the planned switch in indexation of business rates in England from the Retail Prices Index (RPI) to the lower Consumer Prices Index (CPI) to 1 April 2018.  Business rates were due to increase next year in line with September’s RPI of 3.9% while September’s CPI was 3%.  The Chancellor stated this decision is worth £2.3 billion to businesses over the next five years.

A close read of the detail has also revealed two other measures which will affect business rate payers.

Of particular note is that legislation will be introduced retrospectively to address the so-called “staircase tax”. This penalised companies which occupied space in communal blocks and is spread over several floors or separated by corridors.  Businesses were billed for rates as if they occupied separate premises.

Affected businesses will now be able to ask the Valuation Office Agency (VOA) to recalculate valuations so that bills are based on previous practice backdated to April 2010.  This will include those who lost Small Business Rate Relief as a result of a recent Supreme Court judgement. The government will publish draft legislation on this shortly.

Finally, there is also a very important proposal to increase the frequency with which the VOA revalues non-domestic properties by moving to revaluations every three years following the next revaluation, currently due in 2022. To enable this, ratepayers will be required to provide regular information to the VOA on who is responsible for business rates and property characteristics including use and rent.

“These are small but positive steps towards mitigating the impact of business rates,” says Morrish.  “The government will consult on the implementation of these changes in spring 2018. It very much looks like the rating system is moving towards a self-assessment system.”