The Government has now published its fundamental review of the non-domestic rates system.
Its conclusions are uncontroversial with that basis set out by the Chancellor in his introduction to the document when he sets out that “the review reaffirms the importance of rates and their central role in the tax system” and the Government sees “little value in ripping the system up and starting afresh”.
He does however go on to suggest that the Government will consider arguments for and against an Online Sales Tax which, if introduced, would raise revenue to fund business reductions.
The changes confirmed are:
- Supporting the high street and reducing the burden of business rates by providing a tax cut worth almost £1.7 billion for eligible Retail, Hospitality and Leisure properties, for 2022 to 2023. This amounts to support worth more than double the relief that was announced pre-COVID for the 2020 to 2021 financial year and includes additional businesses such as hotels, gyms and bowling alleys. Excluding COVID-19 reliefs, this relief is the biggest single year reduction to business rates in 30 years.
- Cutting the burden of business rates for all businesses by freezing the multiplier for 2022 to 2023, saving business in England £4.6 billion over the next five years.
- Introducing a new relief to support investment in property improvements, enabling occupying businesses to invest in expanding their properties and making them work better for customers and employees.
- Introducing new measures to support green investment and the decarbonisation of non-domestic buildings. This will provide exemptions for eligible green plant and machinery such as solar panels, wind turbines and battery storage used with renewables and electric vehicle charging points, as well as a 100% relief for low-carbon heat networks that have their own rates bill.
- Making the system fairer by moving to three-yearly revaluations from 2023 and bringing forward a technical consultation on the supporting changes later this year.
- Investing in business rates systems to ensure fundamental change by providing £0.5 billion for the Valuation Office Agency (VOA) as part of the Spending Review, including funding for important changes to upgrade VOA IT infrastructure and digital capabilities.
- Providing stability ahead of the 2023 revaluation by extending Transitional Relief and the Supporting Small Business Scheme for 2022 to 2023 to protect small businesses from significant bill increases on the final year of the current revaluation cycle.
- Considering the arguments for and against an Online Sales Tax which, if introduced, would raise revenue to fund business rate reductions.