Menu
In his 2018 Spring Statement the Chancellor, Phillip Hammond, has announced that the date of the next rating revaluation in England will be brought forward to 2021. The announcement comes more than eighteen months after the consultation that gave rise to it, “Business Rates: Delivering more frequent revaluations”, closed. In 2016 the Government consulted on how to deliver more frequent rating revaluations, with the aim of making rateable values, the basis on which business rates are based, more reflective of current property values.
That consultation asked for views about delivering more frequent revaluations under the current system, whereby valuations are prepared by the Valuation Office Agency (VOA); on a self-assessment option for revaluation; and on a formula option, to deliver more frequent revaluations. The summary of responses published to coincide with the Spring Statement shows strong support for more frequent revaluations so as to keep rateable values more closely aligned to current market values. There was little general support for a self-assessment regime as it was felt, by businesses, that this would add to the administrative and compliance burdens, particularly of smaller businesses, and by others, that this could encourage ratepayers to undervalue their properties. There was, also, little support for a formula option as it was considered that a formula would either have to be unduly complex or could lead to unfair results, which would be unacceptable given the high rate of the tax.
The consultation actually closed on 8 July 2016, but the Chancellor’s announcement in the Spring Statement on 13 March 2018 is the first formal outcome from it. The next rating revaluation in England will come into effect on 1 April 2021, based on a valuation date two years before, of 1 April 2019. After that revaluations will take place every three years starting in 2024. These revaluations will be carried out by the VOA. For the time being at least, both self-assessment and formula based valuations have been ruled out. At the Budget 2016 it was announced that that local authority business rate systems would be linked to HMRC digital tax accounts by 2022. However, the government will delay implementation of this until after 2024, to prioritise the delivery of the next revaluation one year earlier than planned, and the move to three-year revaluations. The government will aim to implement this new business rates digital system at the earliest opportunity after the start of the three-year revaluation cycle from 2024.
The Government will also consider the impact of more frequent revaluations on the VOA’s powers to backdate changes to assessments. And the Government has announced that there will continue to be a scheme of transitional adjustments, to phase in new rates liabilities, following the 2021 revaluation. These announcements concern only England, as business rates are a devolved responsibility for the administrations in Wales, Scotland and Northern Ireland. Scotland has already announced its intention to move to a three-yearly revaluation cycle, so it will be interesting to see how Welsh assembly Government responds.
Ratepayers, and others, will welcome the fact that more frequent revaluations should help ensure that rateable values, on which business rates liabilities are based, are likely to be more aligned to current market values, as a result of more frequent revaluations. But, as we have commented repeatedly in these news pages, the fundamental problems of the business rates system in the United Kingdom go a lot deeper than that. The level of recurrent (annual) tax on commercial properties in the UK, which is principally business rates, is higher than that in any other OECD country, and the current level of business rates is higher than any other tax on business. The system is also absurdly complex with a plethora or exemptions, reliefs, supplements and other additions, that has grown up piecemeal over the years and is always confusing and sometimes contradictory. Bringing the next revaluation forward is merely going to bring forward again these fundamental problems, it will not solve them.
