October 2024 Budget – Business Rates Bulletin
In the run up to the election the Labour Government promised major reform to Business Rates. Today’s budget was seen as the first opportunity to start delivering on the promised reforms. These reforms have been presented as a way to level the playing field, particularly for the high street, who are often the biggest critic of the current business rates system.
The ForeView team summarise the key business rates takeaways from today’s Autumn Statement.
- Retail, hospitality and leisure relief – For 2025-26, eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability. This is capped at £110k per business. Qualifying retail and hospitality businesses receive 75% relief on their business rates bill for the 2024/25 financial year.
- Removing charitable rate relief from private schools: As announced on 29 July 2024, private schools in England will no longer be eligible for charitable rate relief. Private schools which are ‘wholly or mainly’ concerned with providing full time education to pupils with an Education, Health and Care Plan will remain eligible for relief.
- Multipliers – For 2025-26, the small business multiplier in England will be frozen at 49.9p (applies to RV’s below £51,000). The standard multiplier (RV £51,000+) will be uprated by the September 2024 CPI rate to 55.5p (currently 54.6p)
- Business rates: sectoral multipliers – The government intends to introduce permanently lower multiplier for Retail, Hospitality and Leisure (RHL) properties from 2026-27, paid for by a higher multiplier for properties with Rateable Values above £500,000.
- Business rates reform – A discussion paper has been published setting the direction of travel for transforming the business rates system and inviting industry to a dialogue about future reforms.
- Business rates: Disclosure Consultation Summary of Responses – The Valuation Office Agency (VOA) is publishing a response to the March 2023 Consultation on Disclosure, which sets out the next steps on increasing the transparency of business rates valuations by disclosing more information.
ForeView Comment:
“RHL Relief: It’s estimated that the retail relief costs the Treasury around £2.41bn per year (2024/25) and has been in places, to varying degrees, since the outbreak of the pandemic. The current relief was due to end at the end on the 31st March 2025, so whilst the announcement that the relief will continue into the new year will be welcome, the cut in the relief from 75% to 40% from next year will be very disappointing for the RHL sector. The announcement will result in an estimated additional £1.28bn rates collected from the retail and hospitality sector. For many businesses benefiting from this relief their rates bill will more than double, increasing by 140%, from April 2025. The impact will push up occupational costs for ratepayers and potentially lead to increased vacant property in a sector which has suffered, long before the pandemic.
Business rates: sectoral multipliers: We are yet to see the detail on what the higher and lower multipliers will look like. It’s worth remembering that there is a planned revaluation on the 01 April 2026 which will impact multipliers.
Business rates: Disclosure Consultation Summary of Responses: The announcement appears to commit to the previous Government’s intention to move toward a compliance-based business rates system, placing greater responsibility on ratepayers to provide details of any changes to their property.
Business rates reform: Alongside the budget a discussion paper has been published. The underlying content appears to be an ongoing commitment to the fundamental business rates system, but with a move towards compliance (rolled out from 2026 onwards) and a shift to digitalising the system for stakeholders.
There will also be a continual review on the anti-avoidance measures on empty property, in particular to assess whether increasing the occupation period from 6 weeks to 13 weeks to reset the empty rates holiday from April 2024 is having the desired impact, but there don’t appear to be any immediate changes.
There will also be a business rates engagement between now and March 2025 and ForeView have already registered our participation to represent the view of our occupier, investor and developer clients across all sectors.
Overall, the announcements are likely to be seen by many as underwhelming. Most surprisingly is the total business liability is expected to increase significantly from April 2025. The table below shows expected business rates contribution to total £34bn, currently estimated to be around £26.3bn for the 2024/25 financial year. It’s hard to understand where that increase in liability is coming from, but at least part will be funded by the RHL rate payers, which will come as a bitter disappointment to the sector.”
If you wish to discuss any of the points raised above in more detail please do get in touch with us with our expert team