The Revaluation in April this year saw many sectors, in particular, those in occupation of light industrial units see sharp increases in their Rateable Value. Figures show on average across England an increase of 27%. These increases were in part mitigated by the freeze in the Business Rates Multiplier; The figure by which you multiply your rateable value to determine your liability, or Rates Payable.
However, with the Autumn Statement on the horizon, how long can this real term reduction in Rates collection for the Government continue?
Statute dictates that income from Rates can only increase at the rate of inflation (as to whether that statement actually holds water is a topic for another discussion). At the Autumn Statement the Chancellor will set out the Business Rates Multiplier (Currently 49.9p for smaller properties and 51.2p for larger). This has been frozen since 2020/21 with the Government using Business Rates as a vehicle within the Tax framework to support businesses through COVID and its aftermath.
As has been prevalent in the press Government departments are all experiencing funding challenges. Also, when viewed in the context of an economy with inflation rates currently north of 6% and last year at some points over 10% could this be the moment when the support can no longer be guaranteed?
What this means for Business Owners
If each of the inflationary increases were compounded and then translated to the multiplier this would lead to significant increases in liabilities for Businesses. We must also not forget that businesses within the Retail, Leisure, and Hospitality sectors have in the current year enjoyed a 75% reduction in their liability.
In our view, the Government needs to seek a balance between the need for funding whilst creating an environment for Business to thrive. The support provided through COVID, not only via the multiplier but through the various reliefs some of which have been referred to in this piece was positive.
However, this cannot be withdrawn in one fell swoop and serious thought should be given in how best to phase this support out.
Getting expert support and advice
At Aitchison Raffety our Business Rates Team can offer you advice and support for your business needs. Contact our team today via email@example.com or call us on 01727 732222