Rishi makes allowance for businesses.
Business Rates made an appearance at last week’s budget with welcome news for many, still suffering from the aftermath of Covid.
With the promise of a fairer system and revaluations every three years yet to come (2023), The Chancellor handed an immediate 50% business rate relief to the retail, hospitality and leisure sectors for the coming 12 months. While this relief is capped to a maximum of £110,000, the cut is worth some £1.78bn he said. “Together with Small Business Rates Relief, this means that over 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%.”
He announced that while headline business rates would remain the same, the whole package, including a new green investment relief, and the cancellation of next year’s planned increase in the business rate multiplier “…would cut business rates by £7bn.” (This is the total of all business rate cuts when combined and viewed over the next five years).
Neil Chatterton, Managing Director of Caxtons said: “The budget announcement on business rates has come as a relief, in more ways than one for our small tenants.
However, with a maximum relief up to £110,000, it means that many bigger businesses will miss out. Add to that the confirmed increase in the National Minimum Wage, supply chain issues, staff shortages and the consequences of Brexit, the benefits may be outweighed by rising costs.
“The cancellation of the usual annual increase in the ‘multiplier’ – which determines the actual rates payable on a commercial property – is a shrewd move which will go down well with business occupiers.”
Neil concluded saying “The Chancellor and the Treasury had an unenviable task with this year’s budget. Their focus, rightly, had to be on repaying an unwanted debt accrued during Covid while still keeping the country’s hopes up. On the whole, there were some positives for business and it wasn’t the total doom and gloom disaster that some had predicted.
Whilst the short-term measures will generally be welcomed, the Chancellor appeared to rule out the root and branch reform of business rates as has been demanded by many occupiers for a considerable time. He suggested that to abolish business rates altogether would be irresponsible as it is a major source of revenue. However, this somewhat misses the point as generally what has been demanded is for business rates to be replaced with a fairer form of business tax, not for it to be abolished without replacement.
The Treasury also published its review of business rates on 27th October, Budget Day.