The new framework for assessing non-domestic property rateable values has been set out under the draft Non-Domestic Rating Bill, introduced to Parliament on 23 March 2023 – but only likely to take effect on or after 1 April 2024. As business rates policy is fully devolved, not all of these measures will apply in Wales.
The more regular revaluations should keep rateable values closer to market reality. However, what is uncertain is the extent to which the proposed amended relief will help support the government’s commitment to green energy.
For landowners and occupiers, the key reforms to the rating system under the draft Bill include:
HMRC will be responsible for the implementation and running of the new system underpinning the reform, including a new online portal for submission of information to HMRC and the Valuation Office Agency (VOA). Because of this new system, HMRC will also be able to share information with billing authorities.
Ratepayers will be obliged to provide details of their taxpayer reference number to HMRC within 60 days of becoming a ratepayer, and to update that information when it changes.
There will also be a new obligation on ratepayers to provide the VOA with other notifiable information relating to the identity of the ratepayer or the existence, extent or rateable value of the property, and again also to keep that information updated.
Ratepayers will need to provide an annual confirmation to the VOA in which they confirm within 60 days of the start of the financial year that they have either provided that notifiable information or confirm that they were not required to provide such information.
There will be civil penalties for failure to comply with notification requirements. It will also be a criminal offence to make a false statement while purporting to comply with the duty.
The digitised system will enable ratepayers to request the information that is taken into account when determining their property’s rateable value. The VOA will only disclose the information where reasonable to do so and if it does not contravene data protection legislation.
More frequent revaluation
Ratings revaluations will now be carried out every three years.
This shortened period is intended to improve fairness in the system, helping HMRC adapt to market changes - potentially supporting landowners and occupiers should the market fall.
Where a periodic revaluation of rateable values takes place, the Secretary of State can make regulations providing transitional relief, currently by 1 January in a revaluation year. This deadline will be moved to 1 February.
Additionally, in line with the Autumn Statement 2022, transitional relief will be funded by the Exchequer and downward caps will be abolished.
Although the Secretary of State will still need to have regard to the objective of securing that the transitional arrangements are revenue-neutral, the objective that the arrangements are self-financing will be removed.
New and amended relief
For occupied properties, the Bill re-enacts the current liability and mandatory reliefs in the Local Government Finance Act 1988 (the 1988 Act).
There will be a new one-year relief where the ratepayer carries out qualifying improvement works – to be specified in regulations. Where improvement works have been completed, the ratepayer will not be liable for any increase in the rateable value of the property resulting from the improvement works for 12 months. The relief will apply until (at least) April 2029 - supporting occupiers seeking to comply with MEES.
There will also be a new Heat Network Relief, giving full mandatory relief where a property is wholly or mainly used as a heat network. This relief will apply to (at least) April 2035.
Certain rural properties - a qualifying post office, general store or food store - will become entitled to mandatory 100% relief from business rates. This is currently discretionary.
The Treasury will be able to specify whether the rateable value of a property in England should be calculated using either the small business multiplier or the national rating multiplier. It will also be able to prescribe which multiplier will be used to calculate an unoccupied English property’s chargeable amount.
Alterations to rateable values
Schedule 6 of the 1988 Act allows for adjustments to be made to the rateable value of a property if a material matter arises - set out in paragraph 2(7). During the pandemic, legislation was enacted with retrospective effect, stating coronavirus and the government’s response was not a material change of circumstance for rateable value. The Bill clarifies that factors arising from legislation, regulations, licensing changes or guidance are not in scope for material change of circumstances claims in England.
Additional administrative changes
|Indexation of rateable multipliers
The rating multiplier is the rate in the pound that is then multiplied by the rateable value of a property to produce the annual rates bill. The multiplier will be amended so that it cannot rise by more than the increase in the consumer prices index (CPI). The government will also be able to specify that the multipliers increase by an amount less than the increase in the CPI.
There is a separate multiplier for small business rates. The current requirement that the general multiplier is set by reference to the multiplier for small business rates will be abolished.
|Central rating list
The central rating list contains the rating assessments of the network of major transport, utility and telecommunications undertakings and cross-country pipelines. Rates on central rating list properties in England are paid direct to the Secretary of State for Levelling Up, Housing and Communities.
Amendments include enabling the Secretary of State to issue directions to the VOA to show, add, alter or remove the names of persons and descriptions of property that should appear on the central rating list, and changes to the liability and mandatory relief for property on the central rating list, to bring them closer in line with other properties.
|Business Rates Retention System
Under this system, councils retain up to half of the rates revenue raised from businesses in their local area, with the remainder retained centrally by the government and used to provide grant funding for local authorities.
The draft Bill will allow the Secretary of State to debit the full amount of grants made to local authorities and ensure that the Secretary of State does not have the power to create a negative balance by debiting more in grants than the Secretary of State has received from the councils.
|Completion notices for buildings ceasing to be and then becoming occupiable
|The Bill will close a loophole in the current rules where the local authority is unable to serve notice to bring a building back onto the rating list after refurbishment or alterations rendered it unoccupiable.
|Greater powers to award discretionary relief
|Currently, a local billing authority cannot grant discretionary rating relief to a ratepayer for a rating year, if more than six months after the end of the financial year has elapsed. This restriction will be removed.