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The Budget and Business Rates

Thursday, March 31, 2016 By Neil Cooper MRICS

Having extended the doubling of the current ‘Small Business Rate Relief’ in England until April 2017 the Chancellor introduced further and more significant reform to assist ‘small businesses’ in his March 2016 Budget. Currently under this Relief no rates are paid by ‘small businesses’ on the occupation of premises having a Rateable Value (RV) of £6,000 or less. This will be doubled from April 2017 to RV £12,000 and made permanent. Additionally, the tapered relief in rates payable by ‘small businesses’ under the same scheme of between 100% and 0% calculated on RVs between £6,001 and £11,999 will apply to RVs between £12,001 and £14,999.

The Small Business Rate multiplier (for 2106/17 48.4p in the £: full charge 49.7p) is also to be extended to apply to all properties with an RV of up to £51,000. The present threshold is £18,000 (£25,500 in London).

The Chancellor believes these measures will exempt 600,000 ‘small businesses’ from paying any occupiers business rates.

One counter measure is that Retail Rate Relief enjoyed for the past 2 years (and worth £1,500 in 2015/16) will come to an end on 31 March 2016.

The Chancellor also announced that the yearly adjustment in the Uniform Business Rate multiplier will be calculated adopting the lower Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). This will come into effect in 2020.

The Government is also intent upon carrying out more frequent business rate revaluations, indeed at least every 3 years. It will have been 7 years between this one and the next (in 2017). A discussion paper will follow shortly on this.

Whilst the proposed doubling of the ‘small business’ rate relief band seems highly attractive, its implementation does coincide with the Revaluation next year when all Rateable Values will be re-assessed based on rental values as at 1 April 2015. Those currently are assessed based on 1 April 2008 rental values.

At first glance and whilst inappropriate to generalise, one would hope that Rateable Values will not increase, certainly significantly, such that more ‘small businesses’ will indeed be included within the enhanced relief from payment.

Here are 3 examples of the potential impact of the new ‘Small Business Rate Relief’ proposals assuming the RV does not alter between now and the Revaluation next year:-

• RV £9,000 – 50% currently payable; in 2017/18 no rates would be charged.

• RV £13,500 – 100% currently payable (at the Small Business Rate multiplier); in 2017/18 50% would be payable.

• RV £50,000 – based on the multipliers for 2016/17 the saving would be 1.3p in the £ in 2017/18 i.e. £650.

In the meantime, your rating assessment remains capable of challenge.

For further advice on whether you are a ‘small business’ or on challenging your rate liabilities please contact Neil Cooper at our Crawley office on Tel: 01293 401040 or email