Budget Bitesize: Business Rates Update
Following today's spring budget, Flora Bennett, partner and head of tourism & leisure, takes a look at how businesses will fare with the Chancellor's announcement of a fund to ease the impact of the revaluation of business rates.
In today’s spring budget, the Chancellor announced a £435 million fund to ease the impact of the revaluation of business rates which is due to take effect on 1 April 2017. It was feared that small to medium businesses could be forced to close or at least downsize where the amount of business rates increases significantly and wipes out any profit. The concessions are to be welcomed and will ease the burden significantly on some small businesses.
Three new measures have been introduced:
- A cap of £50 per month for small businesses which are about to lose their small business rate relief;
- A reduction of £1,000 per annum for pubs with rateable value under £100,000; and
- £300 million discretionary fund for Local Authorities to allocate to cases of hardship, using a formula to be provided by the Communities Secretary.
The changes have hit small to medium rural businesses particularly hard in Lincolnshire and Yorkshire. Self-catering premises, pubs, equine premises and renewable energy projects seem to have been suffered most with some businesses experiencing valuation increases of up to 300%.
More could have been done - there will be still hardship for some. For pubs the increase is limited but could still be substantial; for small businesses there is no guarantee that the £50 monthly limit will continue; medium-sized businesses, will have to rely on the discretionary fund and we do not know when this will be set up or how it will work. Calls were ignored for both slower increases and for relief for premises which are empty for more than three months.
The size of the new discretionary fund in these times of austerity shows how the government has acknowledged the significant impact of the revaluation and the risk of stifling growth in the economy. The budget concessions come at a cost and, perhaps because of this, the Chancellor has promised to look at how to capture a fair share of tax from high tech businesses such as Amazon, who have suffered severe criticism for the small amount of tax they pay.
In response to the budget announcement, business owners are urged to:
- Check their liability by visiting www.gov.uk/correct-your-busine...
- Watch out for details of the new discretionary fund
- Take advice on lodging an appeal
- If all else fails, consider restructuring their business