Autumn Budget 2021: Business rate reform
27 October 2021
In today’s Budget the chancellor laid out some changes to the business rates system, an area many have called for reform in. Sunak was keen to point out that business rates provide a substantial amount of funding for the government and its many initiatives and would therefore not be cut across the board.
The decision has been made to freeze the business rate multiplier for another year. The small business multiplier remains at 49.9p and the higher multiplier will stay at 51.2p. While cutting the multipliers was not an option, increasing these would have added additional costs to many businesses attempting to recover and grow. Business rate valuation schedules are to be increased in frequency from every five years to every three.
Eligible retail, hospitality and leisure properties will benefit from a 50% relief, up to £110,000, for 1 April 2022 to 31 March 2023. An attempt to soften the impact of the increased minimum wage, this relief will aid the sectors hardest hit by the pandemic and its lockdowns.
There will also be a 100% improvement relief for business rates, providing a 12-month relief from higher rates should an eligible improvement raise the rateable value of the property. The relief is intended to begin in 2023, and reviewed in 2028, with the government consulting on how best to implement and run the scheme.
To encourage green initiatives business rate exemptions will be implemented for eligible improvements related to onsite renewable energy generation and storage. Eligible heat networks will also receive a 100% relief. This will encourage companies to uptake de-carbonisation where previously this would increase the rateable value of the property.
These changes target the governments desire to revive the high street and work towards net-zero, giving key sectors some welcome breathing room as other changes increase costs.
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