Business rates relief for small and medium-sized businesses is likely to be extended beyond April 2024, according to The Times.
Eligible businesses currently get 75 per cent off business rates bills for the 2023/24 billing year. This means the most you can get in relief for each billing year is capped at £110,000 per business.
Industry onlookers say that the government is likely to renew the relief for at least another year in the Autumn Budget, if not before, to sidestep ‘cliff-edge change.’
John Webber, head of business rates at Colliers, believes that the timing is key here: “I think people are saying that, because there’s the perception that as we are entering an election year, it will be highly unlikely to take those reliefs away.
“There’s clearly a lot of pressure coming from the British Retail Consortium and that seems to have started quite early. If you’re a betting man, you would probably think that there’s probably ‘odds on’ that it will be retained,” he told Small Business.
Over the years, the government has held numerous consultations and reviews into business rate reform. Even after firm recommendations, the government hasn’t brought about any real change.
Reliefs seem to be a sticking plaster for a bigger problem, ready to be pushed on to the next administration. “If you have business rates at 51 pence, or 51 per cent of the rental value, you have to end up giving a myriad of reliefs – be it small business relief, some retail relief or rural relief, or whatever relief it might be. You have to keep giving reliefs because the headline rate of the tax is just too high,” said Webber.
“What it means is when you are a small business, or indeed if you are a retailer receiving any of these reliefs and those reliefs disappear, then it’s almost like a drug that you’re going to go off cold turkey. Your business model works on the basis that you’re getting that relief, because you might have had it for several years, then all of a sudden, the tap gets turned off, and your business has to all of a sudden find a significant amount of business rates.”
He pointed out that the main issue with extending the relief is delaying any real change happening to business rates.
“The way things are, you could have a situation where the CPI inflation rate for September will potentially be added to the business rate next year. That could be six or seven per cent, on top of 51 pence in the pound, so that is how it’s drafted at the moment. It could happen. I suspect it won’t. I suspect they will make an announcement that they’re going to freeze the multiplier or have a less than inflation figure. But that’s where you are and it’s not sustainable. Something has to be done about it.”
The business rates multiplier continues to be a prominent issue. This is the uniform business rate multiplied by the rateable value of the property, which is then used to calculate rates bills. The multiplier has risen from 34p in 1990 up to 51.2p now. Businesses are calling on the government to reduce it – and Webber agrees.
“I think if there was a commitment, that there was a drive to actually get the multiplier down to about 34p or 30p in the pound, which is where it should be. Then I think businesses can start to see the direction of travel and can start to have some confidence.”
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