2024 Budget – Impact on Business Rates

Today, the Chancellor of the Exchequer, in what was Labour’s first Budget for almost 15 years, set out her intention to raise total annual tax receipts by some £40bn.

Quite understandably, the commentary that follows today’s announcements will focus on the big-ticket items that have dominated the headlines in the run-up, including changes to employers’ national insurance contributions, alongside those to capital gains, inheritance tax, the approach to pension taxation, as well as changes to the wider fiscal rules.

However, business rates, which currently make up around 5% of the total take, did not escape scrutiny.

In line with some predictions, the Chancellor announced the intention to introduce differential multipliers based on property use for the first time. Specifically, from April 2026, properties put to retail, hospitality and leisure uses would be taxed at a lower rate when compared with other uses. This discounted rate would be funded by a higher rate applied to “the most valuable” properties. Subject to consultation, the government’s current intention is to increase the multiplier on relevant properties with a rateable value of £500k and above, with the expectation that these measures will continue to be ‘fiscally neutral’.

In the meantime, with the current 75% retail, leisure and hospitality due to expire in April 2025, the government has announced the intention to maintain a discount into 2025/26 but at a reduced rate of 40% and again capped at £110,000 per business. Whilst framed as a saving for business, this will, on the face of it, mean that many small businesses will, in fact, see a significant increase in liability when we reach the new rate year.

Given this reduction in relief for those in retail, hospitality and leisure sectors next year, there is a greater need for businesses in these sectors to ensure the accuracy of their current assessments and put themselves on a more secure footing.

Aside from retail properties, it was also announced that the multiplier on small properties, which currently applies to rateable values under £51,000, would be frozen at 49.9p into 2025/26. The standard multiplier will, in contrast, be increased by the September 2024 CPI rate to 55.5p.

Finally, as expected, the current charitable relief applied to private schools will be removed from April 2025. However, private schools which are ‘wholly or mainly’ concerned with providing full-time education to pupils with an Education, Health and Care Plan (EHCP) will remain eligible for relief.

Many ratepayers may have hoped to hear of the government’s intentions to fundamentally reform the system or to meaningfully reduce the level of tax it seeks to raise and will be left disappointed. Our efforts to effect change with HMT and VOA continue.

Those who were anticipating the announcement of a delay in the next national revaluation, due April 2026, haven’t seen any further movement either. We therefore anticipate this will go ahead as planned, based upon April 2024 rental value in England and Wales. With the government’s position now clear, ratepayers – particularly those with complex portfolios and high-value assets – will wish to ensure they are ready in good time for the new list to come into effect.

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