Government business rates revaluation consultation published

United Kingdom

On 28 September 2016, the Government published a consultation on the transitional arrangements for the England 2017 business rates revaluation.

The consultation runs until 26 October 2016. Affected businesses should consider making representations before the consultation closes.

Statutory requirement for transitional arrangements

The next revaluation of business rates will take effect from 1 April 2017 and regulations introducing the transitional arrangements must come into force by 1 January of the revaluation year.

Expected impact of the 2017 revaluation

The Government announced a significant cut in business rates in the 2016 Budget, totaling £6.7bn over the next five years. However, it predicts that a number of properties will see an increase in business rates; in particular retail, office, industrial businesses located in London, together with the property owned by major transport, utility and telecommunications undertakings and cross-country pipelines.

The Valuation Office will publish the draft valuation list for 2017 on 30 September 2016.

Alternative transitional arrangements under consideration

The Government proposes transitional arrangements to phase in the rate increases. The Government has proposed two options, of which it supports the second. The transitional arrangements will be self-funding with the cost of relief for ratepayers who face increases funded from those benefiting from decreases.

The arrangements apply the following thresholds; small properties will be those with a rateable value of up to £28,000 in Greater London and £20,000 elsewhere, large properties will be those with a rateable value of £100,000 or more, and medium properties will fall between.

The first option, which follows the 2005 and 2010 transitional arrangements, proposes three levels of support for small, medium and large properties facing increases. This will be funded by two caps on reductions; one for small properties and one for medium and large properties.

The second approach also includes three levels of support for properties facing increases but these will be funded by three caps on reductions. The caps on rate increases are the same for small and medium businesses as proposed under the first option, but large properties will receive less protection. Large properties will face an increase in 2017-18 rates of up to 45% rising to 50% in 2018-2019. In addition medium properties, whose rates bills are reduced, will have their reduction capped at 10% in 2017-18 and rising to 25% (rather than 4.1% rising to 5.9%, as proposed under the first option). Medium properties benefitting from the 2017 revaluation would therefore benefit from the full reduction sooner under this option.

The Government believes that this transitional relief will be worth £3.4bn, of which £1bn will benefit 140,000 properties in London.

Businesses should consider how the options might affect them and whether they need to respond to the consultation.