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How will business rates revaluation affect you in 2023?

Local councils charge business rates on properties used for non-domestic purposes, from shops and restaurants to offices and factories. This tax is based on the ‘rateable values’ of the different property types, which were last valued in 2017.

The Valuation Office Agency (VOA) has therefore been revaluing business rates in England and Wales, with the updates coming into effect from 1st April 2023.

The new valuations will reflect the changes in the property market since the previous revaluation, meaning some businesses are likely to see their business rates increase – though others may see no change, or even a reduction.

Fortunately, to ease the burden of new business rates
in 2023, the government also announced a package of support measures in the Autumn Statement 2022.

Here’s what you need to know about business rates revaluation and relief.

Business rates revaluation

The previous revaluations that came into force in 2017 were based on rateable values from 2 years prior in 2015, and the new revaluations this year are based on rateable values from 1st April 2021.

This means the new rates will take the turbulent effect of the COVID-19 pandemic on the property market into account. There are likely to be significant fluctuations in rateable values between different areas, and between different types of businesses (e.g. online vs bricks and mortar).

Revaluing non-domestic property rates typically doesn’t generate more revenue than before, but helps to distribute the tax more fairly across the business rates system.

A property’s rateable value is based on its rental value, which the local authority then uses to calculate its business rates bill
using the government’s ‘standard’ or ‘small business’ multipliers.

These multipliers will be frozen at 49.9p and 51.2p
respectively, staying at the same rates since 2020 instead of increasing by 3p
each – so all payers should benefit from a 6% lower bill even before the application of any reliefs.

Business rates support package

In addition to the business rates multipliers freeze for 2023–2024, there are multiple relief reforms in the works that will deliver up to £13.6 billion in support over the coming 5 years.

The Transitional Relief Scheme will cap increases caused by the revaluation, at 5% for small businesses, 15% for medium businesses, and 30% for large businesses. Funded by the Exchequer, this scheme is expected to benefit 700,000 payers over the next 3 years.

Additionally, Retail, Hospitality, and Leisure Relief
is increasing from 50% – meaning that around 230,000 properties that don’t qualify for small business rates relief could now get 75%
off their bill (up to £110,000 per business).

The Supporting Small Business Scheme will cap increases at £600 for the year for businesses who lose their eligibility for either small business rate relief or rural rate relief due to the revaluations. This should help around 80,000 small businesses in the next 3 years.

A previously announced relief in 2021 is still due to go ahead, with Improvement Relief ensuring that payers don’t have to face increased business rates for 12 months after making accepted improvements to the property – which will be in force from April 2024–2028.

Downward caps will also be abolished, so businesses with lower rates after the revaluation can benefit from a reduced business rates bill right away.

Get help with business rates

You can now use the ‘Find a business rates valuation’ service to find the rateable value of your property from April 2023, and get an estimate of your new business rates bill.

If you believe there is an error with the information used to value your property, you should contact the VOA. You can also contact your local council to find out whether you are eligible for any type of business rates relief.

Alternatively, you could benefit from hiring a tax consultant to manage your business taxes on your behalf. To find out more about how our accountants in Barnsley and Leeds could assist you with business rates, please get in touch.