The Budget and Business Rates – a disappointing conclusion for England

27 October 2021

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Chancellor Rishi Sunak set out his Budget and the results of his Spending Review on Wednesday 27th October 2021. H M Treasury also published the Final Report of the Government’s Business Rates Review, some conclusions of which were announced in the Budget.

In summary the conclusions of the fundamental review were:

  • Provision of a tax cut worth almost £1.7 billion to support eligible Retail, Hospitality and Leisure properties from 2022 to 2023. Eligible properties will receive 50% relief up to a cash cap of £110,000 per business.
  • A freeze of the multiplier for 2022 to 2023, saving businesses in England £4.6 billion over the next five years.
  • A move to three-yearly revaluations from 2023 to ensure more frequent revaluations to better reflect property values.
  • A new relief to support investment in property improvements.
  • New measure to support green investment and the decarbonisation of non-domestic buildings.
  • Provision of £0.5 billion funding for the Valuation Office Agency (VOA) as part of the Spending Review, to include funding for upgrading of VOA IT infrastructure and digital capabilities.
  • Extension of the Transitional Relief and the Supporting Small Business Scheme for 2022 to 2023.
  • Consideration of the arguments for and against an Online Sales Tax, with a consultation to be published shortly.

Andrew West, Business Rates Director at Cooke & Arkwright said, “A positive point from the Budget was the move to three-yearly revaluations from 2023, which will help to ensure that there is a closer relationship between the tax base and current property values.

“The freeze of the multiplier and the 50% tax cut were also welcome news. However, the Budget announcements and the details in the final report were once again sticking plasters that do nothing to address the excessive complexity of the system that prevents businesses from understanding if they are eligible for relief and exemptions, and how to claim.

“The RICS, Rating Surveyors Association and IRRV engaged positively in the consultation process and made constructive and realistic suggestions for change that would be to the benefit of all business rate stakeholders. Much of what we suggested was ignored.

“In particular, the retention of the multiplier of around 50% was extremely disappointing, as the broad consensus is that this is far too high a tax burden. We have been asking for this to be reduced to 30-35%.

“We were also disappointed that the downward transitional burden in England was not scrapped as we called for. This is where businesses in England see reductions in their business rate bills following revaluation phased in, rather than receiving the immediate benefit. Transitional adjustments do not apply in Wales and Scotland, where bills change immediately when they go up or down following revaluation.

“As the Chancellor stated in this document, this is the final report and is the roadmap for the coming years. Far from being the major reform it originally set out to be, we have to resign ourselves that little has changed yet again in a business rate system that remains divorced from a fast moving, dynamic economy.”

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

The Welsh Rugby Union Limited, Welsh Rugby Union Group