changes in business rates

Navigating Changes In Business Rates: A Guide to the UK Business Rates Modernisation Bill

In the ever-evolving landscape of business, adaptability is key. The United Kingdom, with its dynamic economy, is no stranger to the need for periodic updates to legislation governing commerce. One such development is the introduction of the UK Business Rates Modernisation Bill, introduced to Parliament in March 2023. This comprehensive piece of legislation promises to reshape the way UK businesses perceive and engage with local taxation. In this blog post, ASTOP will unpack the intricacies of the Business Rates Modernisation Bill, highlighting key changes and their implications.

What Is Driving Business Rate Changes in 2023?

The existing business rates system in the UK has long been a subject of scrutiny. Based on independently assessed property values, the system faced criticism for failing to reflect the reality of running a business in 2023. Small businesses, in particular, felt they were not well-served by an inflexible, old-school system that relied on historical data. The Business Rates Modernisation Bill represents a concerted effort by the government to address these concerns, bringing the system in line with the realities of the 21st century.

We have listed key changes below. If you have any questions about a particular aspect of your business rates, it pays to seek professional advice.

More Frequent Valuations

Recognising the need for agility in responding to UK property market fluctuations, the Business Rates Modernisation Bill proposes more frequent revaluations. The previous five-year valuation cycle will reduce to three, meaning that business rates will more accurately mirror the economic conditions of the day. A more responsive and equitable taxation system will mean those due lower bills due to falling property values will not have to wait as long to realise the benefits.


Commercial Property Rates: Implication for Property Owners

There are three new relief schemes announced as part of the bill. We have summarised these below.

  • Green Energy & Decarbonisation – 100% relief is available on a range of green investments including rooftop solar panels, battery storage used with renewables and electric charging points.
  • Low carbon heat networks – a new 100% relief is available on approved low carbon heat systems.
  • Building improvement relief – if building work improves the rateable value of the property, this is discounted for the first year although restrictions apply.

A New Duty to Notify

One of the most important changes to business rates in the 2023 Bill is a new requirement for the ratepayer to make an annual declaration. They will need to share details about their property(ies) with valuers or face fines for non-compliance or falsehoods. The new bill also makes provision for greater data sharing between business rate valuers and HMRC. New business ratepayers will have to notify HMRC within 60 days of taking responsibility for any property, for example.

aiding small businesses

Changes to Transitional Measures

Currently, the law requires transitional measures to be revenue-neutral. This has meant significant falls in rateable property value have seen corresponding drops in business rates phased over time rather than applied immediately. The Business Rates Modernisation Bill ends this phasing, aiding small businesses in particular for whom waiting for savings was a particular trial.

New Completion Notice Rules

Proposed new rules allow a Local Authority more opportunity to force developers’ hands into paying rates on almost-complete new buildings. The Government is trying to close a perceived loophole whereby declaring a building ‘unfinished’ means avoiding the liability for business rates.

Material Changes Law Tightened

Finally, the business rates rules around material change in circumstance are being tightened. Government initiatives, such as the lockdown or smoking ban, that could be previously claimed as material changes to business value will now no longer be considered in rateable value. This aspect of the bill will need more detail, but at present seems to leave the UK government free to legislate without mitigating the risks locally.

Understanding the impact of changes to the UK business rates system might feel like a daunting task, but fortunately, there are various avenues where entrepreneurs and business owners can seek expert advice to make informed decisions.

One primary resource is, of course, your local government itself. They ought to provide detailed information about business rates, reliefs, and the impact of forthcoming legislative changes. Government websites are valuable repositories of official documents and guidelines, ensuring that individuals have access to accurate and up-to-date information. It might not be the most thrilling work, but a few hours of surfing should get you at least a little up to speed.

For personalised advice, engaging with a professional accountant or tax advisor specialising can provide valuable expertise. These professionals stay abreast of the latest developments, interpret complex regulations, and offer strategic advice to optimise businesses’ tax positions.

Networking within business communities and industry associations also proves beneficial. Peers who have faced similar challenges may share practical insights and recommendations based on their experiences. Moreover, attending workshops, seminars, or webinars hosted by business organisations and industry experts can enhance one’s understanding of business rates and related issues.

This is where we fit in. At ASTOP we are not simply tax advisors. Our work fosters strong relationships between landlords and charities while maximising business rate relief from day one. Local governments typically champion such relief as our methods align with ethical practices, garner public acceptance and gain positive recognition. We will continue to deliver exactly as we have been as and when the new Bill becomes law.

Ultimately, the Business Rates Modernisation Bill is a multi-faceted piece of new legislation that offers a comprehensive improvement strategy for business rates in the UK. We look forward to seeing it make progress through parliament.