Following heavy lobbying from business groups, changes to business rates were announced at the end of January, ahead of the March Budget, to come into effect from 1 April.
Business rates run annually from 1 April, meaning that late Budget on 11 March would leave very little time for local authorities to adjust their systems for any changes. The Chancellor had to pre-empt his Statement and announce the reforms early for new council bills to be sent out on time.
The reforms will be welcome news to many businesses. From 2020/21, the retail discount on rates rises to 50%. Part of a package of measures intended to help small businesses and rejuvenate high streets, small shops and cafés will see a reduction in their rates bills by half as they also benefit from the cut. The relief has been extended to cinemas and music venues with rateable value below £51,000 alongside other qualifying businesses. An existing discount of £1,500 for local newspaper premises is also being extended for another five years.
After a decade of falling numbers, pubs in particular should see a boost from an additional ‘pub relief’ of a £1,000 discount on businesses with a rateable value of less than £100,000. Around 18,000 pubs are expected to benefit from the changes, which, coupled with the main rate reform, could see a saving of up to £13,500. The reliefs are subject to state aid rules that apply generally to larger pubs, and are applicable only in England. The devolved governments in Scotland, Wales and Northern Ireland control their own small business rates.
The timing, however, has already proven a stumbling block. While the rate reductions should be automatic, some councils have flagged that their system will not be ready to implement the correct billing in April. Businesses may not see the discounted amount they expect and could have to apply to their local councils to receive rebates later in the year.
Further reforms of business rates are expected to be announced in the Budget.