Anthony Hughes from RVA Surveyors answers some questions SMEToday asked regarding what 2022 will bring for business rates.
It’s going to be a bit of a strange year, with many businesses getting back to normal or the new normal trading conditions. With almost all of the Covid support ending in March and the start of the final year of the current rating list, there will be uncertain times for some who will be faced with having to pay business rates for the first time since the beginning of the pandemic. This will be a test for many as business rates represent the third or fourth highest cost to most businesses.
The provisional rating list, which sets out the values for all commercial properties for the 2023 rating list, is due to be announced later in the year. This will allow businesses to understand their liability for the next rating list, which will begin in April 2023. Businesses will no doubt be hoping that they don’t see any dramatic increases in their property’s rateable value.
At this point, less than a third of all properties have been reviewed meaning that two thirds of commercial properties have not reviewed their commercial property to see if they could benef from potential backdated and furture savings. We therefore predict that the number of businesses looking to reduce their rates will increase dramatically over the next twelve months as more and more businesses realise that time is running out toachieve a reduction in their business rates liability in the current rating list.
How will the change to three-year rating list affect SMEs?
The change to a three-year rating list can be positive or negative. Until we see the 2023 provisional rating list, it will be hard to determine who will be the initial winners or losers when the new lists begin in April 2023. The move to a three-year rating list is for the government to attempt to create a fair and up-to-date rating list. Unfortunately due to the way in which this is calculated, (using a desktop exercise involving comparable rental evidence), many will be left overpaying or will have their rates increased unnecessarily.
How can I check I am paying the correct business rates?
Due to the complex nature of business rates and how they are calculated, the only way to safely review your business rates is to engage a specialist surveyor to conduct a full on-site inspection of your property. The surveyors will also conduct full research and analysis of comparable properties within your area. Only then can you truly know if your commercial premises are correctly or incorrectly rated.
Does business rates relief only apply to retail?
No, there are a whole host of reliefs that cover a vast number of industries, properties and businesses. Some of these reliefs are based on short term relief whereas others can last for an entire rating list or even further still.
The most widely known,, which has held a few different incarnations over recent years, is retail relief. During the Covid-19 pandemic, this has been called ‘expanded retail relief’ or ‘business rates holiday’, allowing for a much wider spectrum of businesses to meet the eligibility criteria and receive the relief. As the Covid support for business finishes at the end of March this year, it will change slightly and now be called ‘retail, hospitality and leisure relief’. Small business rates relief has been in circulation since 2005 and has helped thousands of small businesses to operate with little or no business rates liability as a result.
To see a complete list of all reliefs that you may be eligible for, you can simply visit the business rates section of your local authority’s website, which outlines all of the reliefs available and their relevant eligibility criteria.
What is the Business Rates Improvement Relief?
A new improvement relief will take effect from April 2023, offering businesses that have improved or expanded their property a 12-month relief on any increases in the rateable value that would occur as a result of their work.
This relief offers scant benefit to expanding and growing businesses with only a single year’s relief. The increased long term cost of business rates for these properties coupled with the significant investment that would be required far outweighs any benefit the single relief would bring.
Interestingly this relief is over a year away starting in April 2023 and, like the Green Investment Relief, requires companies to speculate heavily for scant or meagre return from the Government.
What is the new Green Investment Relief?
In the 2021 Autumn Budget, the Chancellor announced a new Investment Relief, which will be available from April 2023; the Government will offer eligible businesses investing in ‘green’ property improvements and installing green technology a relief or exemption on their business rates.
By introducing the Improvement and Investment reliefs, there is a combined £750m support available from April 2023, which is designed to be spread over a number of years and quite frankly does not seem enough by half if the Government wants to encourage businesses to invest significantly so soon after the incredibly difficult trading conditions that nearly all companies have endured in the last two years.
Thank you Anthony
Anthony can be contacted at RVA Surveyors.