In the business rates calendar, 1 April 2019 promises to be a significant date, for several reasons:
- in last year’s Autumn Budget, the Chancellor announced a new retail discount schemefor eligible businesses, which is due to come in on 1 April;
- 1 April is the antecedent valuation date, which means that all non-domestic properties are valued on this day for the next rating list;
- it is also the date when this year’s new 2019/20 business rates bills come into effect, meaning that many businesses will see some sort of change in what they will be expected to pay.
In other words, it’s a time for businesses to look carefully at their current situation regarding rates, but also to make sure they are properly prepared for the future.
The Retail Discount Scheme
Recognising that in town centres, high streets need all the help they can get, the Government is providing a retail discount scheme for occupied retail properties.
Those retailers who are eligible could see around a third knocked off their rates bills.
They must be occupying a “retail” property with a rateable value of less than £51,000 per year, and the relief applies to the years 2019-20 and 2020-21. State Aid De Minimis limits also apply.
Businesses set to benefit will be shops, restaurants, pubs, hairdressers and others, although the definition of retail is open to some discretion by local authorities..
From a business rates viewpoint, it is vital, therefore, that retailers look at their rateable values to see, firstly, whether they are eligible, but also to check whether their current valuations appears to be correct.
Preparing for the Next Rates Revaluation
Even though the next business rates revaluation is several years off, the groundwork is being put in place right now.
This is because, while the revaluation itself is still some way off in 2021, the valuations are based on rental values at 1 April 2019.
This follows the Government’s decision to bring the next business rates revaluation forward, from 2022 to 2021, so it is now only in two years’ time.
It’s vital, then, that businesses are aware of what these valuations will be based on, and be prepared to challenge them, if necessary, in due course.
In addition, the Valuation Office are sending over requests to collate rental and other site details from ratepayers so they can prepare the levels of value for the next List. These forms require careful completion.
Understanding Business Rates Liability
Now is also the time when the forthcoming year’s business rates bills for 2019/20 are arriving. The issue here is that businesses in different parts of England and Wales will be experiencing different levels of change.
For some, there will be rates increases, but others may find that their individual rates are below the 2.4% inflation rate used to calculate the new charges.
Business rates liability calculations are not straightforward, because different properties will have different multipliers.
For example, larger properties will face a smaller increase based on a 2.23% inflation rate, because if they have a rateable value over £51,000, only part of their multiplier will be increased by the rate of inflation.
However, it is worth also noting that properties under this value are those which might be eligible for the new retail discount scheme.
Some properties that have been receiving transitional relief, will find that because this relief reduces each year, their bills may rise significantly.
For many businesses then, factors such as property type, size of spend and location will be the key to what their rates bills look like for this year, because there are so many factors that can affect the final figure, including:
- transitional relief
- small business rates relief
- supporting small businesses relief
- charitable relief
- local discretionary revaluation relief
and now, the new retail discount.
Do not just rely on adding up the figures in your business rates bill and assuming that therefore everything is as it should be.
Get the right advice, be prepared for the future, and check your business rates liability.
For more information, please contact our team.