With business rates continuing to represent a significant cost for many occupiers, landlords and property investors, attention is already turning to the next Budget and the question of what it could mean for the business rates system.
While it is impossible to predict exactly what the Chancellor will announce, business rates are likely to remain an area of interest as the Government balances the need to support businesses with the importance of maintaining revenues for local government. Potential changes could affect everything from reliefs and eligibility to valuations, administration and the overall level of rates payable.
For businesses, however, the message is clear: waiting for the Budget should not mean putting your business rates strategy on hold. There are practical steps organisations can take now to make sure they are paying the right amount, understand their exposure and are in the strongest possible position to respond to any changes.
The business rates system has undergone significant change in recent years, including changes to reliefs, revaluations and the way liabilities are calculated. Looking ahead, some of the areas that could attract further attention include:
Business rates reliefs
Reliefs and discounts are frequently used by Government as a means of supporting particular sectors or businesses facing financial pressure.
Future Budgets could potentially see existing reliefs amended, extended or more tightly targeted, while new measures could be introduced in response to changing economic circumstances. For businesses, understanding which reliefs they are currently receiving – and whether they are claiming everything they are entitled to – remains important.
The cost of doing business
Business rates are a significant fixed overhead, particularly for businesses operating large property portfolios or occupying high-value premises.
With wider cost pressures continuing to affect businesses, the Government may consider whether further measures are needed to reduce the immediate burden on certain sectors or property types. Any such measures could have significant implications for cash flow and property strategy.
Rateable Values and the valuation system
The relationship between a property's Rateable Value and its actual trading or rental circumstances will remain an important issue for ratepayers.
The Government has already moved towards more frequent revaluations, and the valuation system is likely to remain under scrutiny. For businesses, this makes it increasingly important to understand how their properties have been assessed and whether the underlying valuation evidence is accurate and appropriate.
Business rates administration
Changes do not necessarily have to involve the amount businesses pay. The Government may also look at how business rates are administered, including billing, compliance, information requirements and the process for challenging valuations. For larger organisations with multiple properties, even relatively minor administrative changes can create a significant operational impact.
What can your business do now?
Whatever is announced in the next Budget, businesses should not overlook opportunities to review their existing business rates position.
1. Check your current business rates bills
Start with the basics.
Businesses should make sure their bills reflect the correct properties, rateable values, liability periods and reliefs.
It is also worth checking that:
• the correct liable party is shown;
• all relevant properties are included;
• applicable reliefs have been correctly applied;
• instalment arrangements are accurate; and
• changes to your property portfolio have been reflected.
For businesses with multiple properties, carrying out this exercise across the entire portfolio can identify inconsistencies that might otherwise be missed.
2. Review changes to your properties
Your business rates liability is closely linked to the physical and operational characteristics of your property.
If a property has changed since it was last assessed, it may be worth reviewing whether those changes could affect its Rateable Value.
Relevant changes could include:
• refurbishment or redevelopment;
• extensions or alterations;
• changes in the use or configuration of space;
• changes to trading or operational requirements;
• sub-letting or changes in occupation; or
• significant changes to the property's physical characteristics.
Keeping an up-to-date record of these changes can also provide useful evidence if a valuation needs to be reviewed.
3. Consider whether your Rateable Values are correct
Businesses should not assume that the rateable value on their bill is necessarily correct simply because it has been published by the Valuation Office Agency.
There may be circumstances where a property's assessment warrants further investigation.
A professional business rates review can help establish whether there are grounds for a challenge and, importantly, whether the available evidence supports a realistic prospect of reducing the liability.
This is particularly relevant for businesses with large portfolios, complex properties or significant changes to their operations.
4. Understand your future exposure
Budget announcements can create opportunities, but they can also create additional uncertainty.
Businesses should consider modelling their potential business rates liabilities and understanding how changes to rateable values, reliefs or other Government measures could affect future costs. For property-intensive businesses, this should form part of wider financial and property planning rather than being treated as a stand alone exercise.
5. Be ready when the Budget is announced
Once measures are announced, the detail matters.
Eligibility criteria, transitional arrangements, implementation dates and application requirements can all determine how a change affects an individual business. Having accurate property information and a clear understanding of your existing business rates position means you can respond quickly rather than starting the process from scratch.
6. Preparation is better than reaction
There will inevitably be considerable focus on the Chancellor's announcements and what they could mean for business rates. But businesses do not need to wait for the Budget before taking action.
A review of your current liabilities, rateable values, reliefs and property circumstances can help identify opportunities to reduce costs, address potential errors and prepare for future changes. For organisations with substantial property portfolios, the potential financial impact can be significant. The businesses best placed to respond to changes in the business rates system are those that already understand their position.
How Dunlop Heywood can help
At Dunlop Heywood, we help businesses understand and manage their business rates liabilities, combining specialist valuation expertise with a practical understanding of the challenges facing property occupiers and owners.
Whether you operate a single property or a large portfolio, we can review your current position, identify potential areas for investigation and help you understand your options.
Don't wait for the Budget to review your business rates position. Get in touch with Dunlop Heywood to discuss how we could help your business manage its rates liability and prepare for whatever comes next. You can also check your own rates bill here using our handy calculator: https://www.dunlopheywood.com/check-your-rates-bill/
