Our Thoughts
Wed, 20/12/2023 - 12:00
· 2 min read

2023 - a year of major change for business rates but what’s in store for 2024?

2023 will be seen by the rating fraternity as a landmark year with the Non-Domestic Rating Act 2023 receiving royal assent.  It is arguably the most significant legislative change since five yearly revaluations were introduced in 1988.

Following Jeremy Hunt’s first Autumn Statement, the year started positively with the abolition of downwards transition and the rates multiplier once again being frozen in the face of 10% inflation.  The 2023 Autumn Statement however, has been less generous.  From 1 April 2024, although the small business multiplier will be frozen again at 49.9p, ratepayers with RVs of £51,000 and above will see a 6.7% inflationary increase.

The new Act introduces some notable changes with immediate effect - three yearly revaluations are finally on the statute book and the annual adjustment to the rate in the pound will be linked to CPI instead of RPI. It also enables the Government to make further changes in the future. 

One controversial development however, concerns ‘material changes in circumstance’ (MCCs). A significant number of appeals were submitted due to the pandemic, which contended that lockdowns and social distancing advice were matters affecting the use and enjoyment of property.  However, in response to this, the Government passed emergency regulations to stop all matters relating to the pandemic from affecting a property’s rateable value (RV). 

The new Act now goes further, ruling out any legislative change or government advice from influencing RVs, which in practical terms captures things like planning restrictions.  Any such effect on value can now only be reflected at the next revaluation, though physical matters (e.g. adjacent building works or opening of a new shopping centre) will continue to be valid MCCs.

The Valuation Office Agency are still looking to introduce a system of self-declaration at the 2026 revaluation.  This will include the completion of annual property returns to identify alterations to properties as well as providing ownership or rental details. Draconian penalties for non-compliance are also proposed.  However, it’s possible the upcoming general election and the Government’s unreliable track record with IT projects may lead to delays in the system’s implementation. BNPPRE will keep you abreast of any developments.

A more immediate concern is the eagerly awaited response to the consultation on Business Rates Avoidance and Evasion. One of its aspects is the minimum period of occupation necessary to refresh a period of empty property relief.  In our response, BNPPRE made the case that in view of the current economic conditions, the current arrangements should be broadened with an extension to the existing exemption period for vacant properties.  However, we fear that the Government will follow Scotland and Wales’s example by curtailing the existing arrangements.  

 

This article first appeared in CoStar.

2023 - a year of major change for business rates but what’s in store for 2024?