The new year is bringing in some exciting potential changes to business rates. Our government is conducting a review of the entire business rate system, with results likely to be announced in Spring 2021.
This is occurring due to the widely held opinion that the current system is in need of updating since it is based on rent prices from 2015. With everything that has happened recently, it is only to be expected that the property market has changed since then. The Valuation Office will usually adjust the rateable values of business premises every five years.
This is calculated by using a centralised “multiplier” to work out what the annual rates should be.
The small business multiplier applies to commercial properties with Rateable Values below £51,000, while the standard multiplier is for those with Rateable Values of £51,000 or more. The vast majority of properties are on the small business Rateable Value.
It was announced on the 25th of November that business rates would be frozen in 2021/2022, as a measure to help businesses bounce back from COVID-19. This will save businesses around £145m.
Relief from the local council
If you are a small business worried about affording all your bills right now, you can apply for a discount from your local council. To be eligible for this, generally, your property has to have a Rateable Value not exceeding £15,000.
It has not yet been confirmed whether the 12-month business rate holiday applying to shops, pubs, theatres and hospitality venues, that began in March 2020, will be extended beyond March 2021.
The announcement that the rates will be frozen is a good first step, but the real clincher in small business survival lies in whether this business rate holiday is continued or not. The ICAEW has suggested that simply reducing the multiplier going forward will be a better way to ensure that business owners are able to afford rates while keeping a compromise with maintaining the governmental revenue.
We are here to help.
At this accountancy firm, part of our job is keeping abreast of any changes to the law. HMRC systems and rules update frequently so hire us to take the headache out of it all, so you can focus on running your business.