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Thu, 17/11/2022 - 12:00
· 2 min read

Autumn Budget Reaction | Business Rates

Rate in the pound frozen and downwards transitional phasing abolished, on-line v ‘bricks and mortar’ rebalanced and draft 2023 rating list published.

Today’s eagerly awaited budget speech is based upon stability, growth and public services against a principle of avoiding tax rises that damage growth. It is against this backdrop that the Chancellor of the Exchequer surprised everyone by confirming that the Uniform Business Rate (UBR – “rate in the £”) will remain at the current level of 49.9p from 1 April 2023 (and 51.2p for ‘larger’ properties).  Location specific poundages, such as the “Cross Rail” supplement in London of 2p, will continue to apply.

Government states that freezing the UBR for a year will protect businesses from rising inflation, worth £9.3bn over the next five years. How much of a reduction that really is can now be assessed as the draft 2023 Rating List was put on-line shortly after Jeremy Hunt finished his speech.  It is now possible to review how the total rateable value across the country has moved since the 2017 revaluation

The unpopular transitional relief scheme is to be overhauled from 1 April so that there will be no downwards phasing. This means properties that decrease in rateable value on 1 April will have their rate liability calculated based on the frozen rate in the pound, rather than the reduction in liability being phased in over a number of years. Upwards transitional phasing is however to remain, although unlike the 2017 revaluation the percentage increments are “back-loaded”, whereby the protection against the full increase in liability lessens in subsequent years.

Historically those premises in upwards phasing would in effect be subsidised by those whose decrease in liability was in downwards phasing. This pledge is worth £1.6bn and will be funded by Government, rather than those who should be receiving lower bills and is expected to benefit 300,000 properties.

Other measures include a cap in the increase for properties that lose their entitlement to Small Business Rate Relief as a result of the revaluation, worth £600 per year to an individual ratepayer. This relief is to be applied before Retail Leisure and Hospitality Relief that for 2023/24 will increase from the current discount of 50% to 75%, although the cap of £110,000 per business ensures that this measure will be of benefit to ‘small’ operators of particularly low rateable value premises.  

The Chancellor of the Exchequer expects the Revaluation and today’s measures combined, will reduce rates paid by the retail sector by some 20%, whilst logistics and distribution’s liability will increase by 27%, thus rebalancing liabilities between these sectors.

Autumn Budget Reaction | Business Rates