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The Valuation Office Agency review business rates periodically to realign the rating list with rental levels. The current rating list ends on the 31st of March 2023.
The new rating list will come into effect on the 1st of April 2023 and is based on rental values as of the 1st of April 2021. Interestingly, this was a period when the effects of Covid-19 were negatively impacting rental markets.
As these important dates loom on the horizon, now is the ideal time for businesses to engage with a rating surveyor who can review the correctness of a rateable value(s).
Below is my roundup of the main points to be aware of as we prepare for the new rating list.
Transitional Relief
Transitional relief is one of the biggest announcements for me because it gradually phases in changes in rateable values from one rating list to the next – whether that is an increase or a decrease. Below is the current scheme for the 2017 rating list.
If your bill is increasing
| Rateable value | 17 / 18 | 18 / 19 | 19 / 20 | 20 / 21 | 21 / 22 |
|---|---|---|---|---|---|
| Up to £20,000 (£28,000 in London) | 5.0% | 7.5% | 10.0% | 15.0% | 15.0% |
| 20,001 (28,001 in London) to £99,999 | 12.5% | 17.5% | 20.0% | 25.0% | 25.0% |
| Over £100,000 | 42.0% | 32.0% | 49.0% | 16.0% | 6.0% |
If your bill is decreasing
| Rateable value | 17 / 18 | 18 / 19 | 19 / 20 | 20 / 21 | 21 / 22 |
|---|---|---|---|---|---|
| Up to £20,000 (£28,000 in London) | 20.0% | 30.0% | 35.0% | 55.0% | 55.0% |
| 20,001 (28,001 in London) to £99,999 | 10.0% | 15.0% | 20.0% | 25.0% | 25.0% |
| Over £100,000 | 4.1% | 4.6% | 5.9% | 5.8% | 4.8% |
Many businesses will, of course, be hoping for a reduction in their rateable value, which would mean lower costs…or will it? Perhaps not, even if a rateable value falls by 50% from the 2017 to the 2023 rating list, businesses may not see the benefit straight away.
For example, using the current Transitional relief scheme, a rateable value in 2017 of £100,000 reducing to £50,000 in 2023 would look as follows (assumed 10% inflation);
| Total | |
| Rateable Value 2017 rating list | £100,000 |
| Rates payable 2022/23 | £51,200 |
| Rateable Value 2023 rating list | £50,000 |
| Rates payable 2023/24 without Transitional relief | £24,950 |
| Rates payable 2023/24 factoring in Transitional relief | £50,688 |
Depending on what Transitional relief scheme is introduced, and if inflation remains at the present level, the next rating list could be fixed at a level that’s far too high for many businesses.
Small Business Rate Relief
Smaller businesses will be looking out for any changes to the Small Business Rate relief (SBRr) scheme.
The SBRr scheme is set when the ratings list is first released. For the 2017 rating list the SBRr scheme provides 100% relief if the rateable value is less than £12,000, but no relief if the rateable value is £15,000 or more.
Historically, the thresholds for Small Business Rate relief have increased from one list to the next. It is funded by occupiers of larger properties; currently, a 1.3p in the pound supplement where the rateable value is £51,000 or more. This makes it a convenient means to deliver tax cuts without a direct cost to government.
The existing SBRr scheme does start to create problems in the rental market when a rateable value is just beyond the upper threshold of £15,000.
My personal view is that SBRr could be administered as an allowance, whereby the first £12,000 of rateable value is awarded to an eligible ratepayer, regardless of their rateable value. In reality, we will most likely see an increase in the upper threshold from £15,000 to around £25,000.
Expanded Retail Discount
Retailers currently receive a 50% discount on their rate bills. It’s unclear whether the government will look to continue this into the 2023 rating list. If they do end the discount, they might justify it by declaring that the expected reduction in rateable values in the 2023 rating list is respite enough. However, the impact of Transitional relief must be considered carefully to ensure retailers reap the benefits of a lower rateable value.
Draft 2023 Rating List
The Valuation Office Agency are expected to publish a draft 2023 rating list during the last week of November 2022 and this can be amended before any business rates payments are due.
Furthermore, there is still time to review your 2017 rating assessment which can be backdated as far as April 2017.
How The CPN can help
The CPN has 30 member firms dedicated to delivering expert guidance, information, and research on this subject.The CPN offers expert, local advice on a national scale, whether you represent a business with a national presence, or you are a sole trader, The CPN can assist with appeals, preparing and presenting evidence, reliefs, exemptions, empty rates mitigation and more.