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Changes to business rates

Changes in the government’s 2016 Budget which affect business rates

From 1 April 2016

Billing and rate collection

  • The government will work with local councils in England to standardise business rate bills and ensure ratepayers can receive and pay bills online by April 2017
  • The aim is that, by April 2022, council business rates systems will be linked to HMRC systems, meaning businesses can manage their rates bills and other taxes in one place.

Update December 2016

A Standard Simplified Business Rates Bill:

The Department is continuing to work with the sector on this commitment, and is aiming to develop and share a model best practice example bill in 2017. The Government does not intend to regulate to enforce any mandatory changes to bill format ahead of April 2017.

Online Payment and Receipt of Business Rate Bills

The Government is committed to ensuring that all ratepayers have the opportunity to both receive and pay bills online. Government intends to make this a mandatory requirement by April 2018.

Long term business rates review

  • The summary responses to the long-term review of business rates in England will be published in March 2016.

From 1 April 2017

Small Business Rate Relief:

 

  • Small Business Rate Relief will be doubled (from 50% to 100%)
  • Businesses with a property with a rateable value of £12,000 and below will receive 100% relief
  • Businesses with a property with a rateable value between £12,000-£15,000 will receive tapered relief

Business rates multiplier

  • The threshold for the standard business rates multiplier will be increased to a rateable value of £51,000. Therefore, businesses with properties with a rateable value below £51,000 will pay lower rates.

Local newspapers

  • There will be a £1,500 business rates discount for office space used by local newspapers in England.

From 1 April 2018

Public toilets

  • Local councils can use discretionary relief powers to support public toilets

From April 2020

Annual indexation of business rates

  • There will be a switch in the annual indexation of business rates from the Retail Price Index (RPI) to the Consumer Price Index (CPI), which is the main measure of inflation. CPI is generally lower, therefore taxes for all businesses paying rates should reduce.

Other information

Business rate revaluations

  • The government aim to introduce more frequent business rate revaluations (at least every three years).

Small Business Rate Relief

  • The government aim to consider the feasibility of replacing Small Business Rate Relief with a business rates allowance for small businesses.
  • This will take place after council systems and HMRC systems are linked (which is aimed to be done by April 2022)

Business rates retention

In the Autumn Statement 2015, the government announced that:

  • Local councils will keep the business rates they collect (councils with lower income due to this will be compensated)
  • Local councils will have the power to cut business rates to boost growth
  • Elected Mayors will have the power to levy a business rates premium for local infrastructure projects

There are no firm timescales on this yet, though it is expected before 2020.

The impact of these measures will be considered as part of the government’s consultation on 100% Business Rates Retention, scheduled for summer 2016.

The government will trial approaches to 100% Business Rates Retention in Manchester, Liverpool and London.