BUSINESS RATES CHANGES IN THE AUTUMN BUDGET 2021

Ratepayers should be sitting on the edge of their seats, waiting to hear what the Chancellor of the Exchequer will announce next Wednesday in the Autumn Budget.

Those expecting meaningful reform are likely to be left disappointed, given recent reports that any largescale changes through the Fundamental Review are now not likely to be announced. Notwithstanding, there are several areas where immediate clarity is essential and ratepayers should not be expected to wait until the more significant announcements.

For us there are some key questions:

• What will the multiplier be for next year? The Government chose to freeze the uniform business rate (UBR) for 2021/22, stripping out the normal inflationary increase. With the September CPI figure now revealed to be 3.1%, which ought to see the UBR increase to 52.8p, ratepayers will be keen to understand whether government will take the same approach again or instead choose to increase it in line with that default figure?

Ratepayers need transparency on their liability for next year to ensure their financial planning is accurate and that tax bills can be paid.  This is an issue which has to be addressed as soon as possible.

• Will any further relief be given to those in the retail, leisure and hospitality industry or has this sector had its bite of the cherry? With 15 months of full relief in England and 24 months’ full relief in Wales and Scotland, will the Chancellor decide that this should have been enough for them to weather the recent pandemic?
• Will the Chancellor offer any clarity on transitional relief? While ratepayers eagerly await their new rateable values, effective from 1st April 2023, if a harsh downwards transitional scheme is in play, they will be offered little respite from a high liability, set on outdated rental figures.
• Are three yearly revaluations the way forward and, if so, from when? This was a key focus of the most recent public consultation, and we, who are in favour of three yearly revaluations, hope that there will be a positive update on this matter.  However, the Chancellor may leave this to be considered alongside other key issues that were broached in the Fundamental Review.
  
• Finally, will the Chancellor address the subject of an online sales tax or will any decision be pushed back further, leaving ratepayers in this sector concerned about what their future tax liability will be?

This comes with a certain amount of irony as business rates are supposed to be a tax on the occupation of non-domestic property as opposed to a tax on ‘business’.  As matters stand there is no visibility as to what a sales tax would entail and the prospect of a ‘mixed’ tax for ratepayers runs the risk of some unintended consequences and some inevitable nervousness the Government may prefer to avoid.

We will be posting more following the Budget next week, with our views on any announcements regarding business rates, what they mean and what businesses should be doing next.