George Osborne’s recent budget caused a storm of controversy for many reasons, but what effect will it have on business rates? The government is always keen to appear pro-business, and reforms to make business rates work for businesses would be a sure-fire way to do this.
Many reforms to business rates were announced in the budget, so how will they change things, and will they change things enough? Here is a summary of what the 2016 budget means for business rates.
Some businesses may benefit
Companies classified as ‘small’ businesses are in luck: the Small Business Rate Relief threshold has been doubled. This means premises valued at £12,000 will no longer qualify businesses for liability.
On top of this, a property with a value of £51,000 or lower will see a discount of around 1p to the pound. Osborne claims this will benefit 600,000 businesses. Additionally, premises’ rateable values are now to be re-evaluated every three years, starting from April 2017. Down from the present five years, this will help keep business rates aligned with the current economic climate, whatever that may be at the time.
Another welcome reform is the promise that business rates will be payable online alongside other HMRC tax bills by 2022. This should help the process run much smoother for many business-owners.
But there is a downside
The imminent Enterprise Bill includes measures to stop the Valuation Office Agency showing businesses the information they use to asses their premises. This will make the rating system less transparent, and make it much more difficult for businesses to ensure the lowest possible rating.
Coupled with this, it will now take as long as 34 months for a business to challenge the rateable value of its premises. This is good news for local authorities, but bad news for business.
Thanks to these changes, fewer businesses may be likely to challenge their business rates, which would mean more money for the local council, but less money for the local business.