Navigating the changing business rates landscape:
Five key points to be aware of
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Business rates in England are on the brink of significant transformation, heralding substantial alterations for ratepayers. The Non-Domestic Rating Bill 2023, currently progressing through Parliament, will usher in pivotal changes. Here are five crucial aspects businesses need to comprehend as these reforms take effect:
- Shortening Revaluation Periods: Historically, business rates were reassessed against new market rental valuations every five years. However, the Non-Domestic Rating Bill 2023 introduces more frequent revaluations. While this might align assessments with the rental market’s reality, it could pose challenges, particularly for prime sector occupants, potentially increasing rates for businesses in sought-after locations.
- New Compliance Obligations: The heightened frequency of revaluations brings about stringent compliance obligations. Ratepayers must now notify the Valuation Office Agency (VOA) in real time about any changes affecting rental value, property, tenancy, or usage. Failure to comply within specific time frames will incur penalties. Additionally, taxpayers must provide their unique reference number to HMRC, emphasizing the need for meticulous record-keeping and adherence to deadlines.
- Introduction of New Reliefs: Several new business rates reliefs will come into play. For instance, the improvement rate relief, effective from April 2024, incentivises light property improvements, offering a 12-month rateable value freeze post-improvement. Additionally, exemptions for eligible plant and machinery used in renewable energy initiatives and heat network rate relief for low carbon networks are being introduced, promoting eco-friendly practices.
- Improved Transparency and Data Sharing: Greater transparency regarding valuation methods and comparable data is being introduced. However, access to this data is conditional on ratepayers’ compliance with new obligations. While this move enhances fairness in assessments, challenges remain in providing comprehensive rental analysis, hindering a complete understanding of tax assessments.
- Reforming Empty Property Rates Relief: The ‘Business rates avoidance and evasion’ consultation aims to curb misuse of empty property rates relief. Proposed amendments include extending the reset period for relief applications and possibly requiring a minimum occupancy threshold. While these changes aim to discourage avoidance, businesses must adapt to potentially increased void costs and diminished property values.
In summary, businesses must proactively engage with these changes. Compliance, meticulous record-keeping, and understanding the nuances of these reforms are paramount. By staying informed and prepared, businesses can navigate the evolving business rates landscape effectively, ensuring they pay accurate amounts and capitalize on available reliefs.
If you would like to discuss any of the above, then please get in touch with us by either calling on 01642 616616 or by emailing [email protected]
Portland Estates Management
