Several reports are coming out in the media that the Government is considering extending business rate relief beyond the current April 2024 deadline.
As reported in The Times and Small Business, industry experts are speculating that government wants to avoid a financial cliff edge for businesses when the current rate reliefs finish and eyes are now turning to the autumn budget for an announcement.
Eligible businesses currently get up to 75 per cent off business rates bills for the 2023/24 billing year – capped at £110,000 per business.
Vested interests such as the British Retail Consortium (BRC) are keeping up the pressure on ministers with other industry lobbies across England and Scotland also clamouring for a relief extension.
The current reliefs have been likened to a drug for many small businesses and sectors and if those reliefs are withdrawn wholesale – whether that be small business relief, retail relief or rural relief – then business will have to go through “cold turkey” as one expert put it.
If the tap is turned off then hundreds of thousands of businesses will face a huge hike in their business rates, at a time with energy prices are still high and the cost of living is squeezing consumer spending. On the other side of the coin, if reliefs are extended and the headline multiplier of business rates remains unchanged, then any real reform to business rates is kicked down the road once more.
Aaron Mcleod, Operations Director from Dunlop Heywood said; “The extension of retail relief into 2023/2024 provided valuable support to many small businesses in what continues to be extremely challenging times. An extension from April 2024 would continue to help these businesses to navigate through the continuing economically challenging times and any thoughts of removal would be a massive faux pas for the Government in what will be an election year whilst also possibly proving to be the nail in the coffin for many small retailers.
“At worst, a change from 75% to 50% to continue to help those businesses currently in receipt, may aid the transition away from the support if the costs of the scheme are a concern for government. I would be surprised if Retail Relief was not continued in some form post April 2024.”
If we see the CPI inflation rate this month also high, this again only put upward pressure on top of the existing multiplier (currently 51.2p in the pound), compounding the existing issue. Most commentators believe however the multiplier will be either frozen or increased less than CPI inflation.
The business rates multiplier will continue to be a talked about issue. This is the uniform business rate multiplied by the rateable value of the property, which is then used to calculate rate bills. In 1990, the multiplier stood at 34p – in 2023 it stands at 51.2p.