A Good Budget for Retailers

Business Rates

Alongside the freezing of the tax rates, the key takeaway for business rates in today’s autumn statement is the abolition of downward phasing.

The Facts

The business rates highlights in the 2022 Autumn Statement are: ·

  • freezing the multipliers ·increasing relief for retail, hospitality and leisure to 75%
  • abolishing downward collars in the transitional relief scheme
  • re-committing to 3-yearly revaluations
  • a decision not to introduce an Online Sales Tax

The Figures

  • Business rates multipliers (the UBR) will be frozen in 2023-24 at 49.9 pence and 51.2 pence for larger assessments.
  • The transitional relief caps will be as follows:
Upward Caps2023/242024/252025/26
Small  (RV up to £20k or £28k in London) 5%10%25%
Medium  (RV greater than small to £100k)15%25%40%
Large (RV greater than £100k) 30%40%55%
  • Retail, Hospitality and Leisure Relief is being extended and increased from 50% to 75% business rates relief, however the £110,000 cap per business will be retained.
  • Liability increases for businesses losing eligibility for Supporting Small Business Scheme (SSBS) or seeing reductions in Small Business Rate Relief (SBRR) or Rural Rate Relief (RRR) will be capped at £600 per year from 1 April 2023.

The Long Read

At every revaluation since 1990, governments have capped increases in liability for the revaluation’s “losers” by charging a surcharge to the revaluation’s “winners”.  In other words, those markets that have been decimated economically and have seen rents fall have been paying a surcharge to cushion the increased liabilities for prosperous areas.  This had the unfortunate effect of forcing struggling towns and cities to subsidise the City of London and Bond Street.  At long last this has been abolished.

For months the team at DWD has been producing budgets for clients’ new openings as the economy recovers post-covid.  As the government had failed to provide guidance on the charging rules for the 2023 List the only approach to take has been to assume that the new rules would mirror previous schemes.  With September’s CPI inflation running at 10.1%, even if a property’s rateable value is forecast to halve, the business rates liability would have increased by more than 5%.  This would have further undermined the credibility of business rates as a tax.

The uncertainty was crippling investment decisions in many towns and cities. 

We now have the certainty of knowing the liability will follow current values, rather than being pinned to rental levels agreed more than 8 years ago. 

This announcement will unlock a considerable amount of investment in the high street.

Contact Alan Vickery, Partner – Head of Business Rates for more information.