Autumn Budget 2021 and fundamental review of business rates

Within the chancellor’s Autumn statement, the headline grabbing changes to the business rate system were announced.

On the face of it the measures proposed would appear to be welcome changes by the rating community and ratepayer’s who have long called for an overhaul of the business rates system.

The final report of the “fundamental review” has also been published with some alarming changes and we detail our understanding below of some of the measures which are to be implemented, which were not announced during the budget speech.

Behind the good news of the changes to the system, there are serious concerns that will severely impact a ratepayer’s right to challenge their assessment, but what does it all mean in practice to a ratepayer?

A move to three yearly rating revaluations

This move has been campaigned for by many in the business community. The next rating revaluation will commence on 1 April 2023 and thereafter 3 yearly revaluations. It is disappointing though that although this will mean the rateable values will be assessed on a more regular basis, rateable values will still be based upon an antecedent valuation date set two years earlier. It is our opinion that this lag will not fully capture the changes to the property market and hence rental values from which rateable values are derived.

Many have called for an Online Sales Tax (OST). The government has acknowledged this but has not made a decision on whether to implement such a tax. Further consultation will be undertaken on this matter shortly. If the government went ahead with such an OST, then the income raised from this tax would be used to reduce business rates for retail businesses with properties in England helping to rebalance the tax between retailers with properties and on-line retailers. We would welcome any such move.

In addition to more frequent revaluations, on commencement of the 2026 rating list there will be a restrictive three-month window for submission of challenges against a ratepayer’s rateable value. This leaves little time for rating professionals or ratepayers to consider their position and gather together relevant evidence to consider whether their value is correct or not within this shortened appeal window. We are extremely disappointed with this decision and consider it a step back to the old days of seeing blanket challenges on properties which will clog up the challenges system causing severe delays in settling challenges and correcting RV’s.

Government has however advised that it is their intention to increase transparency from 2026 and provide full analysis of rental evidence used to set a rateable value. Unfortunately, a request will need to be made to the VOA for this information to be released. It is ludicrous to have to request this when it should be readily available to a ratepayer. Questions arise as to when such a request can be made and whether will this shorten the gap for challenges further if the information is not provided swiftly?

Due to confidentiality issues, there has always been a refusal to disclose the trade adopted on the valuations of properties valued with regards to income – this would include public houses, cinemas, bingo halls etc – as the valuation approach for these properties should be based on fair maintainable trade and not purely driven by actual trade. The inability to discover details of comparable properties trade information may lead to large discrepancies between values for similar properties. Rateable value is meant to be the value for the property “vacant and to let” – the lack of transparency of comparable data means that there is no “stand back and look “stage to the valuation. Preparing challenges without comparable information will prejudice the rate payer.

Finally, there will be an additional burden upon the ratepayer to notify the valuation office of changes to their property and occupier. There will also be a requirement upon the ratepayer to give the VOA rent and lease information along with trade information used for valuations. This will replace the “check” stage of the current system but will mean that ratepayers will effectively be doing what the valuation office should already be doing, and we await details of what exactly this will entail. These measures are to be phased-in during the 2023 Rating List.

Material Changes in Circumstance (MCC) challenges

The report outlines that further restrictions to the eligibility criteria for MCC claims will be introduced. Factors relating to legislative and regulatory factors will be removed from eligibility. This appears a further restriction upon the rights of ratepayers to challenge their assessment during the course of a rating list. This move is of no great surprise following government essentially banning material change appeals against the events of COVID-19 and the lockdown’s that were set down in law.

Retail rate relief

During the pandemic various reliefs for the retail hospitality and leisure sectors were introduced. The report advises that eligible properties will receive 50% relief but only up to a cash cap of £110,000 per business and not per property. For retailers with multiple properties this cash cap will soon be hit, and full rates will then be payable. It is not fully clear whether this relief is in addition to the current relief but given no announcement to the extension of the current relief was made – we doubt it! Further guidance is due later this year confirming which businesses are eligible.

Investing in property

The report outlines that government will introduce a 100% improvement relief for occupiers undertaking eligible improvements to an existing property that increases the rateable value. This will last for 12 months only and apply only to the increase and not the entire liability starting from 2023.

However, this raises the question of whether an occupier investing in a new property and undertaking improvement works would miss out if they had not already been in occupation of the property previously? The government is due to consult on how this relief will work in practice.

Steps towards net zero

An exemption is to be introduced against eligible plant and machinery used in onsite renewable energy generation and storage such as solar panels. This will be in force from 2023 to 2035. This relief will apply to the eligible plant and machinery and not to the property as a whole.

Other reliefs

Small business rate relief currently provides 100% relief for approximately 700,000 properties and will remain in its current form. The report confirms that government does not intend to remove any of the existing reliefs at this time but does however mention that government is undertaking further detailed work in relation to avoidance and misuse of empty property relief and will consult on measures next year.

Transitional relief

Transitional relief is a mechanism that limits the increase or decrease in a ratepayer’s liability between rating revaluations. Transitional relief can lead to nasty surprises for ratepayers when they expect the liability to fall in line with their rateable value and it does not.

Given the reduction in frequency to rating revaluations there is a need for a redesign of the transitional relief scheme to which the government will consult on in 2022 ready for the 2023 revaluation. Details will be confirmed in Autumn 2022.

Uniform Business Rate

What a ratepayer pays is calculated by multiplying the rateable value by the UBR (also known as the multiplier) which is set annually by government. Many industry bodies have called for a major reduction in the UBR. Although the UBR will not be cut, it will be frozen in 2022 and going forward CPI will be the default measure of inflation used for future increases. Further consultation will take place later this year. This decision is extremely disappointing and will keep next year’s rates payments at what most consider to be extremely unacceptable high levels.


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Michael Hampton-Riddington

Partner, head of rating south

Head office

T +44 (0) 20 7408 1010
Mike Hampton-Riddington

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Ryan Jones

Partner, head of rating north


T +44 (0) 161 521 5570

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Tracy Steeden

Partner, business rating

Head office

T +44 (0) 20 7408 1010
Tracey Steeden