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The October 2021 Budget contained several reliefs from business rates that will apply in England in the 2022/23 financial year. It also included Government plans for changes to the business rates system.
Information about mandatory reliefs from business rates can be found in the Library briefing Business rates: reliefs and grant. This Insight covers the additional reliefs announced in the Budget.
The changes apply in England only. Business rates are a devolved matter in Scotland, Wales and Northern Ireland.
Additional changes to business rates 2022/23
For the 2022/23 financial year, changes to business rates in England include:
- Freezing the business rates multiplier: the standard multiplier for 2022/23 will remain at 51.2p, and the small business multiplier at 49.9p.
- 50% relief for eligible retail, hospitality and leisure properties: individual businesses will be able to benefit from a maximum of £110,000 of this relief. Details of which businesses are eligible were not available at the time of publication.
- 100% “improvement relief”. There will be 12 months relief from higher business rate bills caused by any improvements to an existing property, depending on eligibility. This relief will run from 2023 to 2028 in the first instance. The Government will consult on the exact terms of the scheme.
- An exemption from business rates for “eligible plant and machinery used in onsite renewable energy generation and storage, such as rooftop solar panels and battery storage used with renewables and electric vehicle charging points” (see the Fundamental Review of business rates (PDF, 446KB). This will be available from 2023 to 2035.
- 100% relief for eligible low-carbon heat networks that are listed as separate properties on the rating list, to be available from 2023 to 2035.
- Confirmation that business rates revaluations will take place every three years in England. The next revaluation will take effect in 2023, the following in 2026 and so on.
The Government will consult on the details of the improvement relief, the renewable energy exemption, and the relief for low-carbon heat networks.
Transitional Relief Scheme extended
The Budget also announced a one-year extension of the Transitional Relief Scheme put in place alongside the 2017 revaluation of business rates.
The scheme sets limits to the annual amount by which a property’s business rates bill can increase or decrease after a revaluation. The terms of the transitional relief scheme that apply between 2017 and 2022 can be found in the Library briefing Business rates: the 2017 revaluation.
In 2022/23, increases in business rate bills will be capped at 15% for properties up to a rateable value of £20,000 (£28,000 in London), and 25% for medium properties (those with a rateable value of up to £100,000). The transitional relief scheme has been extended because the next business rates revaluation will take effect in April 2023, instead of April 2022 as originally intended.
In tandem, the Supporting Small Businesses relief scheme will also be extended to 2023. Details of this scheme can be found in the Library briefing Business rates: reliefs and grants.
Online sales tax
The Government also committed to consult on introducing an ‘online sales tax’. This follows concerns, outlined in the Government’s 2021 Fundamental Review of business rates (PDF, 446 KB), that businesses that substantially operate online pay comparatively less in business rates than ‘bricks and mortar’ competitors, and that this distorts the relationship between business rates and economic conditions.
The Budget stated that any additional revenue from an online sales tax would be used to reduce business rates for retailers.
The Library published an Insight on the additional business rate reliefs in England in the March 2021 Budget.
About the author: Mark Sandford is a researcher at the House of Commons Library, specialising in local government and devolution in England.
Image: Autumn Budget and Spending Review 2021 ©UK Parliament/Jessica Taylor Attribution 3.0 Unported (CC BY 3.0)
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