Rating Update – King’s Speech 2024

In this update:

• Changes to the Empty Rate Regulations 
• Rate demands for 2024/25 
• Business Rates Reform 

Changes to the Empty Rate Regulations

As detailed in our Spring Budget update the empty rate regulations changed with effect from 1 April 2024. Businesses in England must now occupy a property for at least 13 weeks before they can claim empty rate relief, which remains at 100% for three months (or six months for qualifying industrial properties). 

A further consultation on a “General Anti Avoidance Rule” for businesses in England was also promised pre-Election, however we are still waiting to hear whether this will be continued by the new Government or perhaps wrapped into a wider review of the rating system. 

Business Rate Multipliers for 2024/25

The increases in rate bills for 2024/25 mark a significant shift affecting numerous ratepayers, with the first multiplier increases since 2020. Only occupiers of the smallest properties in England and Scotland benefited from a continued freeze. The impact of these cost increases underscores the need for ensuring ratepayers have explored all opportunities for business rates savings and reductions.   

For a comprehensive view of all Uniform Business Rates see our business rates data card which also includes details of the transitional schemes and various reliefs and exemptions available across the different parts of the UK.  

Business Rates Reform 

In their manifesto, the Labour party said that the current business rates system “disincentivises investment, creates uncertainty and places an undue burden on our high streets”. They also said that in England they would replace the system so that they can raise the same revenue in a fairer way. In their words the new system will “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”. 

We would welcome reform but would urge the Government to consider some simple changes that would redress the concerns of businesses and deliver a simpler and fairer property tax.  

Originally outlined in our article for EG, Next Steps for Business Rates, here is a summary of areas where we believe they should focus: 

A more responsive system 

We have after many years of campaigning only just moved to a three-year revaluation cycle. This means that Rateable Values will more closely follow changes in the market and will avoid some of the imbalances experienced by certain sectors in the past. To align the market and values even further, we would like to see a reduction in the gap between the valuation date, at which the evidence is set, and the revaluation, from two years down to one. 

Simplicity 

The current system has become too complicated with previous governments using multiple reliefs and exemptions to deliver changes. Business and the wider built environment have changed significantly since much of the underlying legislation was introduced. We call for a review of all reliefs rather than a continued tinkering with the existing rules.  

Transparency 

Businesses want to be confident that the basis upon which their rate bills are charged is correct. The introduction of Check Challenge Appeal (CCA) system in 2017 has fallen short of creating a more streamlined or equitable system, compelling businesses to go through a lengthy process before they get to see the evidence that has been used to arrive at their valuation. Most businesses would rather not have to go through this arduous and complex appeal process. 

Recent reviews and consultations have promised more transparency and disclosure. However the proposed duties to notify and inform, enabled by the Non Domestic Rating Act 2023, place more onus on ratepayers and building owners with no reciprocal duty on the VOA to act in a timely manner. Enhanced transparency from the Valuation Office Agency (VOA) would significantly improve the fairness and effectiveness of the rating system. 

For years, ratepayers have held legitimate worries about business rates being the only tax where taxpayers do not have access to the foundational information and data on which their taxes are calculated. 

UBR too high 

The current multipliers are too high, having risen to over 54.5p from a level of 34.8p when introduced in 1990.  To align rate liabilities more closely with market conditions, it’s essential to abandon the notion of a predetermined total property tax revenue. Instead, adjusting the multiplier to a sustainable figure, such as 40p, and maintaining it consistently, akin to the practice with most other taxes, would be a more effective approach. Adopting this approach would allow businesses to observe a direct link between their rate liabilities and rental level – rate liabilities would decrease in alignment with any economic downturns within a sector or locality, and conversely, they would only increase in thriving areas. 

We are keen to work with the new Government to deliver these improvements and are already working with industry groups and the wider profession to ensure that this messaging is reaching the new Government teams.  

As always, we are here to discuss any specific issues regarding your properties, and we will continue to keep you informed of further developments regarding business rates across the UK.