Government publishes bill to revamp business rates system – but does it go far enough?

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On Wednesday, 29th March 2023, the UK Government introduced a new bill in Parliament, which ministers have said will help businesses in England “by modernising the business rates system to incentivise property improvements and support more frequent revaluations.”

If the Non-Domestic Rating Bill becomes law, it will stipulate that valuations of business rates take place every three years, instead of the current five – a change that the Government has said will mean those with falling values will see their bills drop more quickly.

Also included in the bill is new business rates improvement relief, whereby firms making qualifying building improvements will be saved from any increases to their business rates bills for 12 months. It is hoped that firms will be encouraged by this tax break to invest in extending or upgrading their properties.

What are business rates, and what difference will these latest changes make?

As many of those drawing upon our business tax services in Plymouth, Newton Abbot, or Wellington will already be aware, business rates are a local tax that occupiers of non-domestic or business property are required to pay, not unlike how council tax is a tax on domestic property.

Most business properties – encompassing the likes of shops, offices, pubs, factories, and warehouses – are subject to business rates. Nor does the given property necessarily have to be used for business purposes in order to be rateable, as business rates also often need to be paid if the purposes are simply non-domestic.

The changes to the business rates system outlined in the newly introduced bill have been informed by the Government’s Business Rates Review, which ran from July 2020 to October 2021.

Having now been introduced to Parliament, the bill is expected to be debated by MPs “in due course”. The Government has endorsed the bill’s “review and reform” measures, stating that they will make business rates in England “fairer and more responsive to changes in the market.”

How have key figures in the UK’s business sector responded to the proposals?

Local government minister Lee Rowley MP said that the introduction of the Non-Domestic Rating Bill “seeks to deliver the reforms announced during our Business Rates Review. We are bringing the administration of the tax up to date, and making the system more responsive to changes in the economy and introducing new support to reduce barriers to business investment.”

Among those to respond positively to the plans were Melanie Leech, chief executive at the British Property Federation (BPF), and Helen Dickinson OBE, her counterpart at the British Retail Consortium (BRC).

Ms Leech described the measures as a “welcome step towards creating a business rates system that is fair for all”. She said that the switch to carrying out revaluations every three years, rather than every five, was a “marked improvement”, although she added that the BPF “would like to see Government continuing to strive towards even more frequent revaluations in due course.”

The BPF head added that the Government putting in place business rates improvement relief constituted a “welcome boost as property owners and occupiers work together to decarbonise and futureproof older buildings and support the UK’s journey to net-zero.”

Meanwhile, Ms Dickinson was also complimentary of both the more frequent revaluations proposal and the prospect of improvement relief. She added, however, that “the job is not done. Government’s focus must remain on reducing the rates burden, enabling more local communities across the country to thrive.”

The TS Partners team is available to support the survival and success of your business

Whatever your take may be on the latest business rates announcements, you are likely to be thankful for all the specialised advice and help you can receive right now, from skilled, experienced, and reputable tax and accounting professionals.

This is very much what our own team at TS Partners can offer you. So, please do not hesitate to reach out to your nearest TS Partners office today, to find out more about our highly regarded and wide-ranging business tax services in Plymouth, Wellington, or Newton Abbot.