Latest inflation figure paves way for UBR increase next year

This is used by Government to adjust the Uniform Business Rate (UBR) for the following rate year and, if the approach adopted in previous years is followed, the UBR in England (applied to properties with Rateable Values below £51,000) will increase to 50.1p – the first time that the UBR for all properties will exceed 50%. Properties with larger RVs presently pay a UBR supplement of 1.3p which if continued at that level will result in an increase from 51.2p this year to 51.4p next year.

If the same factors are applied the UBR in Wales will increase to 53.8p and in Scotland to 50.0p (applied to properties with RVs up to and including £51,000). In Scotland properties with an RV of between £51,001 and £95,000 pay a UBR supplement of 1.3p with properties in excess of £95,000 paying a 2.6p supplement.

As we face more local lockdowns and regional “circuit breaks” there is a fear that businesses will be facing hikes in their rate liabilities that they can ill afford.

As advised in our update of 2nd September we continue to lobby Governments across the UK to implement substantial cuts to the UBR multiplier over the next two years to help all businesses recover from the Covid-19 pandemic and to extend and expand the rates holiday presently applicable to some sectors of the economy.

We have also reported that the next revaluations in England, Wales and Scotland are to be postponed until 1 April 2023. The Bill to confirm this in England has now completed its passage through the House of Commons and moves to the Lords where we expect it to be passed without amendment. The Bill shifts the latest date by which draft revaluation assessments must be published from 30th September preceding the revaluation to 31st December which allows less time for businesses to budget for their revaluation liabilities. The Minister confirmed at Third Reading in the Commons that 31st December is a backstop and the intention is to publish draft figures as soon as possible to allow ratepayers and local authorities to prepare for the 2023/24 bills.

Fundamental Review of Business Rates – Call for Evidence

In our response to the tranche 1 set of questions in HM Treasury’s call for evidence we submitted that the immediate priorities were for Government to implement the following key measures for the 2021/22 rate year:

1. Reduce the Uniform Business Rate by 50%
2. Continue the existing expanded retail discount (the ‘rates holiday’)
3. Remove downwards transitional phasing for all properties that are still impacted by the transitional scheme.

Although the Chancellor has cancelled the Autumn Budget at which he had intended to announce conclusions on the tranche 1 questions, we are advised that the intention is to still conclude the review on these matters in the Autumn (which in Government speak normally means before Christmas).

Responses to the more detailed questions under tranche 2 need to be returned by 31st October and we would encourage you to take the opportunity to put forward your own views where possible. The second tranche questions cover a wide range of topics under the following headings:

• Valuations and Transitional Relief
• Plant and Machinery and Investment
• Valuation Transparency and Appeals
• Maintaining the Accuracy of Rating Lists
• The Billing Process
• Exploring Alternatives to Business Rates

We would be very happy to discuss how these areas affect your businesses and portfolios and assist you with preparing your submissions.

In our tranche 1 submission we set out the key issues that we will be covering in detail in our tranche 2 response, as follows:

1. A property-based tax should be retained within the basket of corporate taxes.
2. The property-based tax should continue to be based on annual rental values.
3. The property-based tax should be transparent, with the evidence upon which values are based being made available to taxpayers.
4. The Uniform Business Rate should be cut significantly to ensure competitiveness with local property taxes in the EU and OECD countries and to reduce taxes on property in an era of increasing e-commerce.
5. The gap between the valuation date for revaluation assessments and their coming into effect should be reduced from two to one year.
6. Revaluations should be undertaken annually.
7. The Uniform Business Rate should be fixed, with the revenue from business rates fluctuating directly in line with changes in property values.
8. The Government should review all rates reliefs and exemptions to ensure those that remain are ‘fit for purpose’.
9. The regulations governing the rating of plant and machinery should be updated to reflect changes in industry and technology since the last review was undertaken in the 1990s.

Additional Grant Scheme for local restrictions

The Government in England recently announced a Local Restrictions Support Grant Scheme for occupiers of certain categories of properties where local restrictions have been put in place on or after 9th September 2020.

Whilst not directly a business rates matter these grants will be administered by Local Authorities and awarded according to criteria based on rateable value as detailed here in the latest Government release.

• The government is now making some changes to the Local Restrictions Support Grant scheme. These will make the scheme more generous: businesses which are legally required to close due to a nationally-imposed local lockdown will now receive up to £3,000 per month, rather than up to £1,500 per three weeks, and they are eligible for payment sooner, after only two weeks of closure rather than three.
• Properties with a RV of £15,000 or under will receive grants of £667 per two weeks of closure (£1,334 per month).
• Properties with a RV of over £15,000 and less than £51,000 will receive grants of £1,000 per two weeks of closure (£2,000 per month).
• Properties with a RV of £51,000 or over will receive grants of £1,500 per two weeks of closure (£3,000 per month).
• The government is also extending the scheme to include businesses which have been forced to close on a national rather than a local basis.

In a similar way to the Small Business Grants Fund (SBGF) and Retail, Hospitality and Leisure Grant Fund (RHLGF) the government have advised that these will be subject to EU State Aid limits. In this context the European Commission has decided to prolong and extend the scope of the State Aid Temporary Framework adopted on 19th March 2020 to support the economy in the context of the coronavirus outbreak. All sections of the Temporary Framework are prolonged for six months until 30th June 2021. An additional provision now allows Member States to provide businesses with financial support up to €3 million. Up until now support in relation to business grants and direct payments has been limited to €800,000 per business. However, it will ultimately be up to Treasury to determine if they will allow for this level of financial support in England and how to implement this. According to the Commission announcement in relation to the new provision, there may be a requirement to demonstrate a decrease in turnover of at least 30% for the relevant period being claimed for.

The Scottish and Welsh Governments have introduced similar schemes to cover the impact of local restrictions.

This morning the Chancellor announced a new grant scheme for business in England impacted by Tier 2 restrictions even if not legally required to close in the hospitality, leisure and accommodation sectors. It will be up to Local Authorities to decide how to distribute these grants to respond to local economic circumstances and we await more detailed guidance as to how this scheme will operate.

Welsh consultation on empty property rates relief

The Welsh government is consulting about proposed changes designed to reduce what it describes as avoidance of business rates. The new regulations will increase from 6 to 26 weeks the time a property needs to be occupied between periods of receiving empty property rates relief. Responses are required by 12 November 2020.

These continue to be challenging times and our team is here to help you find your way through the months and years ahead and minimise your rates liabilities wherever possible.