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The headline for business ratepayers from the Autumn Budget 2017 is that, for 2018/19 and beyond, the Uniform Business Rate (UBR) will be uplifted by Consumer Price Index (CPI) inflation, rather than Retail Price Index (RPI) inflation. It was announced last year that this change would be made, but from 2020. The Chancellor has succumbed to pressure on high levels of business rates and has brought forward that change to 1 April 2018 instead.
We expect that the effect of this will be to reduce the small business UBR in England for 2018/19 from 48.4 pence to 48.0 pence, and the large business UBR from 49.7 pence to 49.3 pence. Limited relief for hard-pressed business ratepayers, but welcome nevertheless. We expect that the devolved administrations in Scotland and Wales, who have their own powers over business rates, will follow suit but it may be a little while before that is confirmed.
The Chancellor also announced that he would seek to unpick the effects of the Supreme Court decision in Woolway (VO) v Mazars LLP, which has been the subject of comment in these news pages. The effect of that decision was to split into two or more separate rating assessments a large number of properties that had previously been a single assessment. This has resulted in loss of small business rate relief and other unexpected consequences for ratepayers. We are told by the Chancellor that ratepayers affected by this will be able to ask the Valuation Office Agency (VOA) to recalculate valuations, based on previous practice, back to April 2010; including those who lost small business rate relief as a result of the judgement. Legislation to give effect to this will follow shortly, and it will be interesting to see how this will work without risking a flood of new appeals or other unintended consequences.
The £1,000 annual rates discount for small pub businesses introduced last year has been extended for a further year in 2018/19.
The Chancellor has also announced that, from 2022, business rates revaluations will take place every three years, rather than every five years. To enable these more frequent revaluations, ratepayers will be required to provide regular information to the VOA “on who is responsible for business rates and on property characteristics including use and rent”. Might this be the thin end of a self-assessment wedge? We will know more soon because there will be a consultation on this in the Spring.
The other business rates announcements in the Autumn Budget concerned the powers of local authorities to retain the business rates they collect. Local authorities in London, along with the Greater London Authority, will be able to keep 100% of any increase from April 2018, to be pooled and used for projects across London. Similar arrangements elsewhere may be announced soon by Department of Communities and Local Government.
A curate’s egg of a budget for business ratepayers, with some welcome relief on rates increases next year, but still no real sign of any reform designed to address the twin evils of a very high level of tax and an absurdly complex system. Proper reform on these issues seems no nearer.
