The Government has introduced the Non-Domestic Rating Bill to Parliament this week, with the aim of “supporting businesses by modernising the business rates system to incentivise property improvements.”
The Bill follows the conclusion of the 2020 Business Rates’ Review which looked at reforming the business rates system to make it fairer and more responsive for all ratepayers, and supporting more frequent revaluations.
The Bill will introduce more frequent valuations, to take place every three years instead of the current five. It will also provide new business rates improvement relief so businesses making qualifying building improvements will not face higher business rates bills for 12 months. This should make it easier for businesses to invest with new reliefs for property improvements, providing tax breaks for businesses who are extending or upgrading their property.
Overall, the Bill is set to deliver:
- More frequent revaluations, a key ask from the business community to ensure that business rates bills keep up with economic trends.
- Administrative reforms to deliver a sustainable shorter revaluation cycle, which will also enable more accurate rating lists and enable the disclosure of more information to ratepayers about their business rates valuations.
- Measures to support decarbonisation and investment worth over £700 million, including a relief for low carbon heat networks and a new Improvement Relief so that, from April 2024, no ratepayer will see an increase in their rates bill from qualifying improvements made to their property for 12 months.
- Support announced by the Government at Autumn Statement 2022. The Autumn Statement package, worth £13.6 billion over the next five years, includes a 3-year Exchequer-funded Transitional Relief scheme worth £1.6 billion. The Bill removes the statutory requirement for revenue neutrality within Transitional Relief and so delivers a key business ask, by allowing 300,000 ratepayers to enjoy an immediate reduction in their bills from 1 April.
- The Digitalising Business Rates project, will modernise the business rates system, improve the targeting of rates relief, generate better data for central and local government and help to improve business rates compliance.
- Much-needed improvements to the administration of business rates, including replacing RPI with CPI as the measure of inflation used in the annual indexation of the multiplier.
Alongside the Spring Budget, the government also published the Government’s response to the Business Rates’ technical consultation, HMRC’s response to the Digitalisation of Business Rates. In addition, the Valuation Office Agency launched a consultation on Transparency and Disclosure. Those documents can be found here:
To follow the Bill’s progress through Parliament go to https://bills.parliament.uk/bills/3442.