Beyond the retail, leisure and hospitality sectors, many firms urgently need Government support following the pandemic. But those anticipating drastic reform in the autumn Budget were left sadly disappointed. No such targeted relief was forthcoming. Indeed, these businesses have yet to receive any of the £1.5bn relief funds championed in the March Budget. By contrast, retail, leisure and hospitality firms had already received more than £16bn in relief before the autumn Budget. Additional support was announced last week: a further 50% business rates discount for one year - a business tax cut of nearly £1.7bn - but only for those in retail, hospitality and leisure. Whereas 400,000+ office occupiers had to pay their business rates in full, amounting to £7.9m, throughout 16 months of the pandemic.
Appeals by 170,000 occupiers seeking reductions in assessment prompted a retrospective Government ban of all business rates appeals, to be replaced by the £1.5bn relief fund. Relief would be based on economic impact, not falls in property values: 'the fastest and fairest way of getting support to businesses' according to the Government. However, the funding was labelled ‘wholly inadequate’ since it would cover only 30% of the estimated £5bn in challenged business rates. Furthermore, this funding remains blocked by parliamentary procedure, leaving commercial occupiers in limbo.
The solution? The Government should deliver on their promise, getting relief to firms that need it most, and undertake a radical overhaul of the business rates regime, which the Budget largely ignored. Typically 50% of annual rent, UK business rates represent one of the biggest overheads that significantly affects business profitability. Based on economic circumstances in 2015, current rateable values will remain the same until 2023. The system therefore cannot respond to recent momentous market changes.
Although the Budget confirmed a new revaluation cycle from 2023, with revaluations of non-domestic properties occurring every three years rather than the current five, this is insufficient. Vivienne King, chair of the Shopkeepers’ Campaign, said there is disappointment ‘that there is no commitment to annual revaluations so that tax bills reflect the market property values’.