The UBR multiplier for 2019/20 is 49.1 pence for small properties (those with a Rateable Value under £51,000) and 50.4 pence for large properties in England. In Scotland the multiplier is 49.0 pence for small properties, but it is 51.6 pence for large properties. In Wales the multiplier is 52.6 pence for all properties.
The September 2019 CPI figure sets the increase that the Ministers are expected to make, at 1.78%. If Ministers in England, Wales and Scotland were to apply this uplift, then the current figures can be expected to increase in England to 50.0 pence for small properties and 51.3 pence for large properties; in Scotland to 49.9 pence for small properties, and to 52.5 pence for large properties; and in Wales to 53.5 pence, for the 2020/21 rate year, which commences on 1 April 2020.
These estimates will not be finalised until the local government finance settlement, which is expected early in the New Year, political situation permitting. The estimates assume that there will be no change to the Small Business Rate Relief (SBRR) Supplement in of 1.3 pence England and 2.6 pence in Scotland, which is not capped by any CPI uplift. It is worth noting that whilst the Barclay Review report commented on the high level of the SBRR supplement in Scotland, and recommended to Scottish Government that this should be reduced to the same level as in England, Scottish Government has said that this will only be done “when it is affordable to do so”.
There has been continued criticism of the annual increase in the UBR multipliers and the Government responded to this by moving from an RPI uplift to a CPI uplift last year, a difference typically of about 1%. Under the legislation the RPI increase is the maximum increase allowed in the UBR multiplier, so the move to CPI is a concession of sorts.
The inflation figure also affects liability calculations for those properties where business rates liability is subject to transitional adjustments following last year’s rating revaluation. The maximum transitional increases in England of 10% for “small” properties, 20% for “medium” properties, and a whopping 49% for large properties will also be uplifted by a 1.8% inflation increase, adding further pressure to bills for those facing large uplifts. Those ratepayers expecting reductions in liability following the revaluation last year will also be affected by the inflation figures as the maximum level of reduction will, in part at least, be offset by an inflation increase. So, for ratepayers of large properties subject to transitional adjustments, the maximum decrease in rate liability, which would otherwise be a meagre 5.8%, will be reduced to a reduction of only 4.0% because of the inflation adjustment.
All of this lends further weight to the view that the business rates system requires fundamental review and reform. The state of the economy and of the property market do not justify these high levels of tax, nor the burden of the transitional scheme introduced following the revaluation in 2017. The recent Barclay Review in Scotland was fettered by a requirement to be “fiscally neutral”. But in England there is still no sign at all of the fundamental review of the business rates system promised by Government more than four years ago. The Treasury Select Committee, which was reviewing the impact of business rates on business, has still not published its report. The system creaks on and these latest inflation figures will only add to the burden.