The government has announced cuts to rates for UK businesses in a push to return to economic normalcy and provide some safety for those who have yet to find their feet after the pandemic.
Revaluation periods for business rates have reduced to once every three years as opposed to the previous five years, with additional funding to be provided to the Valuation Office Agency to ensure the new revaluation cycle runs smoothly. The five-year cycle has been widely criticised in recent years, with the rates being centred around the value of high-street locations, unreflective of the deteriorating popularity of said high street – especially since the pandemic.
In further happy news for businesses, it has also been announced that next year’s increase in the multiplier has been cancelled for the second year in a row, as this increase was a heavy hit for those already struggling with current inflation. This is believed to save businesses a sum of £4.6 billion over the next five years.
Rishi Sunak announced in the Autumn Budget the introduction of a planned tax relief for the retail, leisure and hospitality sectors worth £1.78 billion. Mr Sunak tweeted that this relief was proposed in conjunction with recommendations from the Confederation of British Industry (CBI) and the British Retail Consortium.
When used alongside the Small Business Rates Relief, “over 90% of all these businesses will see a discount of at least 50%” and the tax break will see a £110,000 allowance per business for one year, excluding the largest retail chains and outlets.
This follows a push from many firms for an online sales tax to be introduced for the largest of retailers who have benefitted from the lack of presence on the high streets. While this tax has not been implemented, Mr Sunak has announced that an online sales tax consultation would instead be implemented.
In a blow for the hospitality industry, despite pleas from businesses to keep the currently slashed VAT rate at 5 per cent, Sunak announced that VAT rates will return to pre-pandemic levels in April 2022, as planned. This comes as a disappointment to the sector, after their #VATsEnough campaign failed to get enough traction.
Further relief has also been provided through a newly-introduced investment relief – introduced to allow businesses to make improvements on their properties and not have to pay any extra rates from 2023. This falls in line with the government’s push for net zero by 2050 and is hoped to encourage firms to adopt green and renewable energy and technology, such as solar panels.
In other business property news, up to £7 billion in selective cuts to property tax is also being provided to further investment and benefit the high street.
Businesses investing in green technology will see a New Investment Relief introduced from the 1st of April 2023 until the 31st of March 2035. This will operate by exempting firms’ green plant and machinery used onsite in renewable energy generation and storage. In a push for the decarbonisation of non-domestic buildings, 100% exemption will be provided for eligible heat networks and will be provided with their own rates bill. This is estimated to be worth £750 million over the next five years.