Skip to main content Skip to footer

Government fails to act on business rates in mini budget today- disappointing says Colliers

23 09 22 Government fails to act on business rates in mini budget hero

Leading business rates consultants say if Government really wants to simplify the tax system, it will remove any planned implementation of phased downwards transition in the next revaluation – otherwise this will stifle recovery in the high street and hinder any levelling up agenda.


John Webber, Head of Business Rates at Colliers said, “It’s disappointing that while today’s “tax cutting“ Mini Budget addressed issues such as income tax, corporation tax, NI and stamp duty, the “elephant in the room”, business rates was largely ignored*, despite the impact that ultra-high rates bills have had on businesses in recent years.

Business rates is one of the highest outgoings for occupiers of property. The tax raises around £32 billion a year gross (£26 billion net) and with rates rising in line with CPI inflation levels for September, predicted to be around 10%, this could potentially add a further £3 billion to the tax bill if nothing is done.

With just six months to go before the next revaluation, businesses still have no idea what their rateable values will be, what the multiplier will be nor how the government will response to its summer consultation on transitional relief. With no clarity about how much they will be expected to pay in their rates bills come April, how can businesses be expected to plan sensibly ahead?

In its election manifesto the Conservative government promised it would reduce business rates for those in the beleaguered retail and hospitality sectors. Now reliefs have come to an end, it will be disastrous if following the 2023 Revaluation the government implements a downwards transition scheme as it did in the last list of 2017, delaying the impact of any rental falls on business rates bills.

Such a scheme would mean any business rate reductions would not be seen immediately but would be spread over the years of the list and will mean many businesses in these sectors will pay too high business rates for too long.

Given current levels of inflation, we calculate that a downwards transition scheme would mean retail businesses, expecting a massive fall in their rates bills in line with rents, will in fact pay £1.65 billion in business rates more than they should do in 2023, and overall, £2.68 billion more than they should do in the three years of the new list. This could be disastrous for the high street, particularly in the less affluent towns of the country.

Webber continued, “Retailers and other high street operators will be now considering their business plans now for next year and looking closely at their future business rates liabilities. The Chancellor has said he is simplifying the tax system – in which case he should simplify business rates- one of the most complicated taxes in the UK today. He can start this by providing reassurance that rates bills next year will immediately reflect the lower rents we are seeing in the market now -providing incentives for businesses to keep or expand space and for property investors to invest in the sector across the UK.

Without this reassurance any “levelling up agenda” will be meaningless. And the high street unlikely to get back on its feet.

In terms of those whose rates bills are likely to go up, such as those businesses in the industrial or distribution sector and some in the offices sector, we also think that given the current pressures from spiralling costs and wage growth, that no business should have to pay more than a 15% rise including inflation. For smaller and medium sized businesses, these increases should be limited to no more than 5/10% including inflation.

It’s all very well giving reassurance over high energy bills and other taxes, but all this will be meaningless if business rates are allowed to soar.

We are disappointed the Chancellor did not mention this in his Statement today and hope in the next few weeks he will address this issue.”

*with some minor exceptions concerning the new investment zones

View our Business Rates services


Related Experts

John Webber

Head of Rating

Rating

Birmingham

I have over 35 years’ experience in the rating industry and lead a 135 plus rating team at Colliers.  When I took over responsibility for the team in 2005, it consisted of only a dozen people and has now grown into one of the leading rating advisory teams in the country.  I am a member of Colliers' UK Management Executive as well as sitting on the company’s Balance in Business Committee. 

I am regularly called upon by the national media to give my views on a range of business rates issues and I am involved in lobbying MPs/ministers and senior civil servants on business rates matters.

I started my career in the Valuation Office Agency in Kidderminster.  I joined Gerald Eve in 2000 where I spent 10 years before moving to Gooch Webster (now Colliers). I sit on the National Retail Panel of Rating Surveyors Association which provides guidance on how the RSA town committees work with the VOA and valuation matters.  I have also held the postion as Chair of the RICS Rating Diploma Committee having passed the prestigious qualification in 2014. I currently sit on the Rating Surveyors Association National Committee .

Along with Philip Harrison we founded 'Accurates' in 2007, the Collier's Compliance and Audit team, which although forms an integral part of the Rating team is now a leading brand in its own right.

View expert

Suzy Simpson

Head of Content, Communications and PR

PR

London - West End

As Head of Content, Communications & PR for Colliers in the UK, I am responsible for driving the strategic direction of corporate communications, media relations, and the programming and production of multi-channel content to engage external and internal audiences across the UK.

Get in touch for help with: 

  • Content Communication Strategy 
  • Media Relations
  • Corporate & Internal Communications
  • Media Training & Personal Brand Training

 

View expert