Welcome to our news sheet focusing on the recent budget update across the UK!
The Chancellor announced various changes in the UK Budget. However as the Scottish Government has autonomy over the business rates system in Scotland this does not affect Scottish ratepayers. Similar funding is made available to Scotland via the Barnett Formula but relief schemes differ in Scotland and there has been no announcement on how any such funding will be allocated. The Scottish Government also passed control of relief schemes to the individual Councils creating even more confusion.
With lots of questions coming in from clients, old and new, please find contact details for our team at the bottom of this newsletter.
Given the UK government’s pre-election commitment to fundamentally reform the business rates system, yesterday’s budget will come as somewhat of a disappointment.
The key points to note are:
- Retail, Hospitality and Leisure (RHL) relief will be reduced by almost half, from the current 75% to 40% for 2025/26, but still capped at £110,000 per annum.
- From 2026, there will be a new, lower multiplier for RHL properties of between RV £51,000 and £500,000. It seems unlikely that this will equate to anything like the 40% relief to be applied to next year’s rates bills, but details are currently thin on the ground in this respect.
- In order to fund this new lower multiplier, there will also be a new, higher multiplier for properties with a rateable value of more than £500,000. As this seemingly applies to RHL properties as well, it is difficult to see what protection or assistance there will be for larger properties in this beleaguered sector in the next few years.
To summarise:
- From April 2026, it appears there will be four potential multipliers:
- Small properties, under RV £51,000 (as present)
- Properties other than RHL properties between RV £51,000 and £500,000
- RHL properties between £51,000 and £500,000
- Properties over RV £500,000
- The Chancellor also announced that the multiplier on small properties for 2025/26 will be frozen at 49.9p. The standard multiplier for properties with an RV of more than £51,000 however, will increase by the September 2024 CPI rate to 55.5p as per normal.
- Although the headlines surrounding private schools have focussed on the abolition of VAT exemptions, a potentially much larger issue is the removal of the current 80% (occasionally 100%) charitable relief from April 2025 as announced in the budget. Relief will still remain available however, for private schools which are “wholly or mainly” concerned with providing full-time education to pupils with an Education, Health and Care Plan (EHCP).
- The new “Duty to Notify” scheme which has been touted for some time, seems likely to be rolled out from April 2026, with the aim of being fully implemented from April 2029. Details will follow in due course but the government’s main aim is to require ratepayers or their agents to complete an annual return of sorts, confirming various property details, as well as a duty to advise the Valuation Office Agency of any changes made to a property which could impact on its rateable value.
- Finally, the Chancellor announced that the government will go ahead with the General Anti Avoidance Rule consultation, which would provide them with a legal framework to counter avoidance schemes as they emerge. The current system in England was tightened earlier this year, when the minimum period of occupation was increased from 6 weeks to 3 months before a period of 100% empty rates relief can be applied (with a limitless cycle of repeat occupation and vacancy periods being possible). Nonetheless, even after this increase in the required period of occupation, the rules are still more generous than in Scotland and, under pressure from cash strapped Councils who are frustrated at the potential lost revenue from the operation of various avoidance schemes, the government is set to review this further as part of their consultation, perhaps to bring the rules closer still, to how they operate north of the border.
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