UK BUSINESSES AND THE BUDGET: WHAT DOES IT ALL MEAN?
There had been a huge amount of hype in the run up to the Chancellor’s Budget this week, with business owners being very keen to see those contentious business rates being reduced. But what are the salient points to focus on? Nigel Fletcher of our Rating team sheds some light…
Major Government announcements often promise much but, with the devil being in the detail, real benefits can be less than originally thought, and as with most Budgets, the real question is, who exactly benefits from the changes announced?
The crucial point for many revolves around the High Street: the Government has acknowledged the challenges town centres and high streets face from changing consumer behaviour and is taking action to help them to evolve. High street businesses are already benefitting from recent reforms and reductions to business rates announced since Budget 2016 – amounting to more than £12 billion over the next five years.
In his Budget, Hammond announced this was going one step further; in order to provide upfront support through the business rates system, the Government is cutting bills by one-third for retail properties with a Rateable Value below £51,000, a move which will benefit up to 90% of retail properties. This will be implemented for two years from April 2019, subject to state aid limits.
The Rating Surveyors Association has added that it understands that this relief will apply to retail property, as defined previously in the retail relief policy that was brought out a couple of years ago – a broad definition but with some exclusions. Billing Authorities will have some flexibility at the borderline. It will apply to all properties with an RV under £51,000 – ie there is not a single property occupation test such as with SBBR. However, the relief will be subject to State Aid limits.
Longer term, there is a plan in place to support a sustainable transformation of high streets, including a £675 million Future High Streets Fund, planning reform, a High Streets Task Force to support local leadership, and funding to strengthen community assets, including the restoration of historic buildings on high streets. At a hyper-local level, West Midlands Mayor Andy Street had already announced plans to invest in the region’s high streets – starting with Bilston, St Thomas Quarter in Dudley, Bordesley Green in Birmingham, St Matthews Quarter in Walsall and West Bromwich.
The Government has also introduced 100% business rates public lavatories relief in order to help keep local amenities open – though the RSA has since advised that this applies to standalone WCs only – not those found in shopping centres.
Local authorities are to be fully compensated for the loss of income as a result of these newly introduced business rates measures, but what about those businesses who fall just outside the £51,000 RV threshold?
There will be a significant number of business with current Rateable Values just exceeding that magic number who will now be ‘appealing’ under the still-clunky ‘Check, Challenge, Appeal’ system seeking a reduction.
This new ‘appeal’ system is proving slow and cumbersome, and even those ratepayers who do achieve a successful outcome to CCA and manage to reduce their Rateable Value to below £51,000 may find to their frustration that they still have to wait many months before they benefit from the Chancellor’s changes.