Autumn Budget 2024: Business Rates

Rachel Reeves and the new Labour government announced their Autumn Budget on 30 October. In this blog we summarise the Business Rates proposals and what they mean for you and your business.

The Government’s position

The Labour Government are continuing with their predecessors’ commitment to reform the current business rates system, but admit that this will take time. There will be no major reforms until at least 2025/2026 and much of the Government’s time and efforts in this financial year will be spent on consulting with businesses, local authorities and rating agencies to understand the reforms required.

Business rates multipliers

With a focus on protecting the high street, the Government intend to introduce permanently lower multipliers for Retail, Hospitality and Leisure (RHL) properties with a Rateable Value (RV) below £500,000 from April 2026-2027.

RHL properties currently paying the small business multiplier (RV below £51,000) will receive the biggest cut. RHL properties currently paying the standard multiplier (RV between £500,000 and £51,000) will also benefit from a permanently lower multiplier. These multiplier rates will be set at the 2025 Autumn Budget.

However, the Government will fund these lower multipliers by introducing and charging a new higher multiplier on properties with a RV of £500,000 and above to capture large distribution warehouses eg those owned by “online giants”.

In the meantime, RHL businesses will receive a 40% relief on their business rates up to a cash cap of £110,000 per business, and the small business multiplier will be frozen.

Government consultation

The Government also announced a further consultation, where they will engage with businesses / business representative organisations, local authorities and rating agents on the following areas:

Impact on investment and growth:

• Efficacy of Improvement Relief
• Importance of business rates when making investment decisions
• Impact of losing Small Business Rates Relief (SBRR) on expansion to a second property
• Presence of “cliff-edges” in the system
• Efficacy of Empty Property Relief in supporting landlords to make improvements to their properties

Fairness:

• In an attempt to tackle avoidance and evasion, the Government will publish a consultation on adopting a “General Anti Avoidance Rule” (GAAR)
• To tackle responsiveness issues, the Government intends to shorten the gap between the Antecedent Valuation Date (AVD) and valuations coming into effect. They will also aim to increase the frequency of revaluations

Duty to provide information:    

• To shorten the gap between AVD and valuations coming into effect, and to increase the frequency of revaluations, the Government will ask ratepayers to provide the Valuation Office Agency (VOA) with information annually.
• The duty of ratepayers to provide information to the VOA was due to be rolled out between April 2023 and March 2026. However, this duty to notify will be pushed back and rollout will begin on 1 April 2026 and will be formally activated for all by 1 April 2029.

Digitalising Business Rates:

• The Digitalising Business Rates (DBR) project will be introduced in March 2028 to match property level business rates data across English and Welsh Local Authorities with HMRC business level tax data.
• The Government say DBR will enable them to identify businesses that need financial support the most.

Comment

While in opposition, Labour have consistently called for sweeping changes to the business rates system. Having taken the reins, the party now appreciates that it is difficult to find an alternative which strikes a fair balance for businesses but also maintains the same level of revenue, with £26bn forecast for this year.

Following a Fundamental Review, Consultation on Avoidance and various reform reports from business leaders over the past two years, we may be suffering from consultation fatigue. However, the proposals outlined above appear sensible. Ratepayers and their advisers will also breathe a sigh of relief that duty to notify will not be rushed in, what with the problems over Check Challenge Appeal still being far from a distant memory. More frequent revaluations and more transparency in the collation and provision of information should be welcomed.

It is now in the government’s hands to ensure that we are discussing constructive changes this time next year and not another consultation.

How to get involved in the Government’s consultation

The Government will be conducting their engagement between November 2024 and March 2025. To get involved, contact: [email protected] by 15 November 2024.

Alternatively, the Government have said they will accept written evidence from stakeholders regarding their “priority areas” (chapter 3 of the Government’s report) until March 2025.

Link to the report

Read the Government’s report.

For further information please contact our leading business rates team:
Richard New, Sam Maw, Laura Woodward, James Myers, Fintan Corkerry.

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