Budget Autumn 2024 – Business Rates

For a Government that committed to replace the existing system with a new system of business property taxation and to level the playing field between the High Streets and online giants, the Budget was surprisingly light on detail and substance.

In the speech, the Chancellor confirmed the following for ratepayers in England:-

• The Government intends to permanently lower business rate multipliers for High Street Retail, Hospitality & Leisure properties from 2026/27.  The shortfall in tax revenue will be funded through a higher multiplier for most valuable properties.  A separate discussion paper confirms these as having an assessment greater than RV £500k. the Government suggests this will capture warehouses occupied by the online sales giants, but of course it will also include other large occupiers unrelated to the High Street.

• The small business multiplier has been frozen at 49.9p. There is no confirmation of the large business rate multiplier which we expect to increase to 55.5p

• The Government has extended the current Retail, Hospitality & Leisure Relief Scheme albeit it has reduced the relief from 75% to 40% of the liability, subject to maintaining the current cash cap of £110,000 per business.  Whilst it is true that there was no scheme in place for 2025/26 this will still come as a massive shock to smaller retailers who currently rely upon the 75% relief granted to them.  There will be no impact upon larger retailers as they will still benefit from the overall total cash cap of £110,000. 

• Private schools will lose their 80% charitable relief effective from 1 April 2025

Alongside the Budget Speech, the Government has published a Business Rates Discussion Paper setting out its priority areas for reforms and inviting interested parties and ratepayers to help design a fairer business rates system.  Of surprise was that the Government continues to “kick the can” down the road rather than grapple with some of the issues affecting ratepayers.  The Chancellor has failed to tackle reliefs that are currently available, especially to those that benefit from Small Business Rate Relief meaning that the burden of rates is shared unequally across all business properties. 

The discussion paper entitled “Transforming Business Rates” recognises that the system has many advantages over other types of tax especially as it continues to raise more than £26bn per annum.  It confirms:-

• An intention to introduce permanently lower multipliers for Retail, Hospitality & Leisure properties with a Rateable Value under £500,000 from April 2026. Properties with an RV below £51,000 will benefit from a greater cut to the multiplier.
• An intention to fund the higher multiplier on properties with a Rateable Value greater than £500,000 which includes the majority of large distribution warehouses.

Key areas within the discussion paper include:-

• Tackling avoidance /evasion – it will consider whether the current empty rate rules are effective. It will publish a consultation on the adoption of a “general anti-avoidance rule” for business rates in England.  Both may have an impact upon empty rate management although there are no immediate proposals to change the current rules.
• The potential cost and benefits of shortening the gap between the antecedent valuation date and the date on which valuations come into effect.
• Giving greater transparency over valuations, evidence and a streamlined appeals process
• The requirement for “Duty to Inform” will be rolled out in phases from 1 April 2026 and it will be formally activated and mandated for all by 1 April 2029.
• A shortened appeal process comprising a single challenge timeline will be implemented for the 2029 Rating List.

The consultation process will commence immediately and the Government is seeking representations no later than March 2025.

We expected some substantial policy announcements, but the Government seems to have “kicked the can down the road” on many areas of the business rates system which require attention.

Whilst many retailers will be grateful that the Retail, Hospitality & Leisure Relief Scheme has been extended by a further year, they will be disappointed that the current relief has been reduced from 75% to 40% which brings it in line with Wales.  Future help for the High Street will be dependent upon the new multiplier applicable to this sector over which ratepayers have no visibility or certainty.

All in all, it is business as usual although we wait to see how the Government will tackle some of the issues affecting the system, particularly reliefs, multipliers and the appeal process.

A summary of changes below.

For more information contact Gareth Buckley.

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