Chancellor Rishi Sunak has moved to give more business rates support to firms, many of which have been hammered by the pandemic.
Firms hoping for drastic reforms were left waiting, but Sunak did use the Budget to update on a number of measures. There was mixed reaction from the retail and hospitality sectors.
Government measures include: introducing a new revaluation cycle that will be delivered from 2023; a new investment relief to encourage businesses to adopt green technologies like solar panels.
There will be a new ‘business rates improvement relief’. From 2023, firms will be able to make property improvements, and, for 12 months, pay no extra business rates.
Sunak added: “I’m announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors. Pubs, music venues, cinemas, restaurants, hotels, theatres, gyms.”
The government is also freezing the business rates multiplier for another year (22/23), saving ratepayers £4.6 billion over the next five years.
Any eligible company can claim a discount on their bills of 50%, up to a maximum of £110,000. Sunak said that is a business tax cut worth almost £1.7 billion.
The government had earlier this year been consulting on plans that would see revaluations of non-domestic properties take place every three years instead of the current system of five.
High street tenants have long complained about the tax, which is linked to the underlying value of a property, but currently based on values from April 2015.
Vivienne King, chair of the Shopkeepers’ Campaign, said there was disappointment “that there is no commitment to annual revaluations so that tax bills reflect the market property values”.
Scott Parsons, UK chief operating officer at Unibail-Rodamco-Westfield’s, which is behind the Westfield centres in London, said: “The decision by the Chancellor to continue to avoid imposing any kind of tax on the e-commerce sector is another blow, as bricks and mortar retailers continue to operate on an uneven playing field.”
He added: “Of the £7.9bn that was raised through retail business rates in 2019/20, just over 5% was raised from online retailers who at the time represented approximately 25% of sales. We challenge this government to be brave and smart enough to come up with a solution, so our high streets don’t have to shoulder virtually all of the tax burden for the retail industry and online pays its fair share.”
Ryan Jones and Mike Hampton-Riddington, partners in the business rates team at Cluttons, said: “As an industry we were expecting no significant measures to alleviate the burden of business rates, so the announcement in the Budget is more welcome than expected, although not as fundamental as hoped, and certainly not in line with ‘a fairer simpler tax system’ that the Chancellor promised at the beginning of his speech.”
Jace Tyrrell, who leads New West End Company, said: "Reducing the time between revaluations to three years is welcome, as is the short term relief for investment in improvements and sustainability, but this falls far short of a fundamental review.”
The British Property Federation’s Melanie Leech said: “While a move to three-year revaluations is welcome, we continue to urgently call for annual revaluations. Businesses need to see long-term reductions in the rates they pay rather than short term fixes.”
But Aidan Sutton, a tax partner at PwC, said: “Retail, hospitality and leisure businesses recovering from the pandemic will be encouraged by the Chancellor’s propitious announcement of a 50% one year discount on business rates for those sectors.”
— HM Treasury (@hmtreasury) October 27, 2021