At the Spring Budget 2017, the Chancellor partially addressed problems caused by the upcoming business rates revaluation, which takes effect from April 2017, from which a large number of businesses are expected to see their business rates bills increase as a result.
In addition to the £3.6 billion transitional relief which was announced in November 2016, the Government has announced £435 million of further support, including:
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support for small businesses losing Small Business Rate Relief to limit increases in their bills to £600 per year
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providing English local authorities with funding to support £300 million of discretionary relief, to allow them to provide support to individual hard cases in their local area, and
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a £1,000 business rate discount for public houses with a rateable value of up to £100,000, for one year from 1 April 2017, which is expected to encapsulate around 90% of pubs nationwide.
Local authorities will again play a key role in helping local business through the introduction of a new relief to help soften the impact of the rates revaluation on 1 April by allocating £300m to help worst-hit businesses.
The new relief creates a new administrative burden for both local authorities and ratepayers, and the Government will need to cut out red tape by making the relief process as painless as possible. A costly application process will add more frustration and confusion to the business rates system.
As with many targeted reliefs, the financial assistance will be subject to EU State Aid limits.
New rules for appeals
As the Budget was being announced, the Government also released details of its consultation paper on appealing business rates bills after 1 April 2017. There was much controversy over the Government’s plan to allow appeals to be refused unless the person appealing could show the valuation is outside the bounds of reasonable professional judgement.
Under the revised approach, on appeal the Valuation Tribunal of England (VTE) will be required to decide whether they consider the Valuation Officer’s valuation to be a reasonable valuation. This will now replace the original proposal of “outside the bounds of reasonable professional judgement”.
The change reflects a specific proposal from the Valuation Tribunal Service in their consultation response that the wording should be amended. Specialist advice should be sought before embarking on the business rates appeal system.
Long term reform of the business rates system
There’s now an overwhelming case for long-term reform to the business rates system. This reform needs to ensure that rates bills are more responsive to the property market whilst continuing to provide local councils with stable income to ensure they can provide valuable local services.
On one of his other announcements, the Chancellor's commitment to provide more frequent revaluations will present a fundamental change to how business rates operate. The Government tentatively set out its options for reform last year and it’s likely that a self assessment option may be introduced to allow valuations to happen more often.
It will bring business rates closer to how other taxes operate and will cut through a lot of existing red tape. However, the reform would effectively transfer the administrative burden onto businesses, which would need to find extra resources to conduct the assessment.
Further information
If you’d like to discuss any of the issues raised here, please speak to your usual PwC contact or speak to Philip Vernon (0150 9604 130), Stuart Botham (0150 9604 234) or Helen White (0207 2126 227).