The Treasury has introduced its first set of changes to business rates in the UK following an 18-month long consultation.
In the Autumn Budget today (October 27), the chancellor Rishi Sunak announced the multiplier for calculating business rates will be frozen for 2022 and 2023, saving businesses a total of £4.6bn over the next five years.
The Treasury has also adjusted the timing of revaluations, which will move to every three years from 2023, down from the current rate of every five years.
The five-year revaluation period had attracted criticism due to rates being based on the value of a high-street location, which might not reflect the declining popularity of high streets in recent years.
Earlier this year the government had asked for industry feedback on changing the regularity of revaluations, after initially announcing the review in March 2020.
The rates, which are levied against a business' property, raise about £25bn in England each year. Decisions on business rates are devolved to Scotland, Wales and Northern Ireland.
New measures will be introduced to support investment in green technologies as well as the decarbonisation of buildings used for work. This includes exemptions for items such as solar panels and wind turbines, as well as a 100 per cent relief for low-carbon heat networks that have their own rates bill. The Treasury estimates this is worth almost £750m over the next five years.
The Valuation Office Agency has been given £500m as part of the spending review, to include funding for an update to the IT infrastructure.
Transitional relief, which limits how much a rates bill can change each year as a result of revaluation, will be extended to 2023.
Also extended by the same period will be the supporting small business scheme, which aids ratepayers who have lost some or all of their small businesss rates relief due to an increase in their property’s value, by capping the increase at a percentage of the asset’s value.
Finally, Sunak announced a tax cut worth £1.7bn for certain retail, hospitality and leisure properties between 2022 and 2023.
Sunak added that the review into business rates reaffirmed the importance of this tax. A wider reform of the business rates regime is still pending.
He said: “While the government plans to bring forward several substantive changes to improve the system, we see little value in ripping the system up and starting afresh as has been suggested by a small minority,” he said.
The chancellor said the Treasury will continue to consider the arguments for and against an online sales tax which would raise revenue to fund the reduction in other business rates.
The Treasury will consult on the online sales tax shortly.