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Phillip Hammond’s first mini-Budget since taking up the position of Chancellor in July delivered a few early Christmas presents, but in the main missed opportunities for businesses says commercial property agent Prop-Search.
To remove the inconsistency between rural rate relief and small business rate relief the Government has announced that it will double rural rate relief to 100% from 01 April 2017. This is anticipated to save businesses up to £2,900 a year and is a positive move for the rural economy and vital businesses like pubs, shops and petrol stations that support their communities.
The business rate relief is available to businesses in rural areas with a population under 3,000, where that business is the only village shop or post office with a rateable value of up to £8,500, or the only public house or petrol station with a rateable value of up to £12,500.
Samantha Jones, an Associate Director of Prop-Search, said: “The Autumn Statement marked the first major fiscal event since the UK voted to leave the EU. And whilst the Chancellor has used this opportunity - post appointment - to spell out the direction of the country’s fiscal policy and put in place measures that will help the UK economy, and cope with turbulence that the Brexit negotiation process will bring, he has failed to deliver certainty to many businesses.”
It has already been announced that the revaluation of commercial property for business rates comes into force from April next year and that this will see large increases in liabilities in some sectors and locations, with falls in business rates in others. However, the Chancellor will have disappointed many business rate payers with his statement described ‘as complicated but good news’, plans to reduce the transitional relief cap on business rates from 45% to 43% next year and from 50% to 32% the year after.
Samantha Jones added: “Those businesses facing the largest rises in their bills - as part of the 2017 Rating Revaluation - will take little comfort from the fact that they will see rates rise of just 43% rather than 45% from April next year, especially when after the last revaluation first-year rises were capped at 12.5%. Furthermore, nothing has been announced to address those that are due to see big revaluation reductions, but whose bills will fall by no-more than 4.1%.
Prop-Search along with many other industry experts feel that those businesses seeing reduced rateable values should get the full benefit straight away, and for those seeing large increases, that these should be capped at 12.5% in line with the previous three revaluations.”
It is also felt that Mr Hammond has missed an opportunity to bring forward plans that would see the Uniform Business Rate (UBR) - used to calculate what percentage of the rateable value of a property has to pay business rates - linked to the Consumers Price Index (CPI) rather than the Retail Price Index (RPI), which recently has been about 1% lower. Whilst the previous Chancellor promised to use this from 2020, had Mr Hammond bought this forward, businesses next year could collectively have saved about £300 million.
To kick start investment in the new 5G infrastructure the Chancellor announced, there will be 100% business rates relief on the new fibre infrastructure/networks. The packages announced in the Budget 2016 for small business rates relief are also confirmed to go ahead from 2017. Furthermore, Mr Hammond announced plans to abolish the Autumn Statement - only to convert it into an Autumn Budget with a Spring Statement.