Budget 2014 - Business Rates - Government announce ‘biggest package of business rate support in over 20 years’

Thu, 04/10/2014 - 16:07 -- jamesstuart

Last week the government announced the ‘biggest package of business rate support in over 20 years’, as part of the coalition government’s economic plan.

Much of this – which had been announced in both the Autumn Statement and Budget 2014 – is welcome for small businesses and struggling high streets. It does, however, fail to get at the bigger picture of business rate re-evaluation, or even of reform of the system. As there is no commitment to reviewing administration until well into the next Parliament, this is more tinkering around the edges instead of real reform.

Business rates are currently imposing a heavy burden on small businesses and these measures go some way to creating space for business growth, at time when the latest RICS UK Commercial Property Market Survey shows an upturn of interest in retail space.

Moreover, there was a missed opportunity here to create longer business rate exemption period for empty commercial premises that undergo refurbishment and refit. Empty property rates currently cover premises that taken out of use for refit or refurbishment, meaning that it is more difficult for existing shops and offices to be brought up to quality and environmental standards. This would also result in more work for smaller, local construction firms and help commercial property meet its April 2018, with legislative changes making it unlawful to let commercial properties with an energy performance certificate (EPC) rating of F or G (i.e. the lowest).

Here are the measures in detail:

1.  Cap the RPI increase in UBR at 2% for the 2014/15 Rate Year

This was the headline-grabbing measure, but the Chancellor failed to mention that he was intending to claw back some of this discount by adjusting the supplement paid by most multiple retailers to cover relief granted to smaller businesses. The supplement went from £0.009 to £0.011, which doesn’t sound much but in reality means the business rate goes up by 2.33%. 

2.  Extend small business rate relief (SBRR) concessions to the end of March 2015

3.  Amend the SBRR criteria to allow businesses in receipt of SBRR to keep it for one year when they take on an additional property that would currently cause them to lose SBRR

4.  Introduce a discount up to £1,000 against business rates bills for retail premises with an rateable value below £50k in 2014/15 and 2015/16

This discount is intended to help local businesses (i.e. pubs, cafes, restaurants and charity shops). Although the scheme is funded by the Exchequer it will be down to local councillors to decide who gets the benefit.

5.  Introduce a temporary reoccupation relief

This worthwhile measure should help reduce town centre vacancy rates by granting a 50% discount from business rates for new occupants of previously empty retail premises for 18 months. However, there has been no further announcement about how this measure will operate or when it will be introduced.

6.  Improve transparency to reduce appeals and improve confidence in the system

The government says the rating system lacks transparency and large volumes of unsuccessful, sometimes speculative, appeals create delays for other businesses. To shift the backlog they announced a commitment to resolve 95% of the 168,000 outstanding business rate appeals by July 2015. 

7. 12-month payment plans to be introduced now

Government will legislate to allow business rates bills to be spread over 12 months - rather than the previous 10 months - with effect from 1 April 2014.