RSM's Vadgama says small business boost is 'welcome'

The business rates revaluation takes effect in England on 1 April 2017 after 5 years and businesses had been lobbying hard over the issue of late.

Business rates are calculated by multiplying the rateable value of a property by a multiplier set by the government. Due to the growth in property values this had meant some large increases in business rates and some businesses had said this could threaten their survival. 

In addition, some small businesses may no longer qualify for one of the discounts called ‘business rates relief’ from the local councils on their business rates and therefore again may now have to pay more business rates.

The five types of business rates relief are small business rate relief, rural rate relief, charitable rate relief, enterprise zone relief and hardship relief.

No business losing small business rate relief will see their bill increase next year by more than £50 a month.

The Government had previously announced an aim to deliver more frequent revaluations of properties, at least every the years, which it confirmed today that further information would be delivered at Autumn Budget 2017. They will also consult ahead of the next revaluation due in 2022. 

The Chancellor announced reductions in business rates which included permanently doubling small business rate relief and extending the thresholds of the relief to ensure that 600,000 businesses will not pay business rates again.

This was said to be worth almost £9bn over the next 5 years. In addition to the £3.6bn of transitional relief announced in November 2016, the government will provide a further £435m of further support for businesses facing significant increases in bills from the English business rates system. 

These measures included support for small businesses losing small business rate relief to limit increases in their bills to the greater of £600 or the real terms transitional relief cap for small businesses each year and providing English local authorities with funding to support £300m of discretionary relief, to allow them to provide support to individual hard cases in their local area.

In his speech he confirmed that no business losing small business rate relief will see their bill increase next year by more than £50 a month and the subsequent increases will be capped at either the transitional relief cap or £50 a month, whichever is higher.

But perhaps the biggest winners were Public Houses. The government will also introduce a £1,000 business rate discount for public houses with a rateable value of up to £100,000.

The Chancellor this will affect 90 per cent of all pubs in England and said that Local authorities will be compensated for the loss of business rates due to these measures.

Rajiv Vadgama is tax director at RSM UK