The Chancellor in his Spring Budget has announced three key immediate measures in respect of business rates. These measures follow significant industry and backbench unrest arising from the 2017 revaluation and, in particular, the revaluation's impact on small businesses. The measures are:
- No business losing small business rate relief will see their bill increase next year by more than £50 a month;
- 90% of local pubs will have a £1,000 discount on their business rates bill; and
- A £300 million fund for local councils to offer discretionary relief for hard-hit cases.
The measures are very much aimed at small businesses. There is no detail as yet on the mechanism for discretionary relief in respect of business rates hardship. The package is by its nature reactionary and does not address the fundamental reasons as to why industry is up in arms about the 2017 revaluation.
The Chancellor in his speech emphasised that business rates could not simply be abolished as they were worth £25 billion in revenue. However, Mr Hammond acknowledged the 2017 revaluation had created issues and "hard cases". The Chancellor is currently considering reform to the revaluation process in order to make it smoother and more frequent. The government's current view is that revaluation should be at least every three years. The government will set out its approach in the Autumn 2017 Budget and will consult upon it before the 2022 revaluation. Whilst this is cautiously welcomed, the scope of such a consultation may be limited and simply may not address the fundamental problems of having a taxation system based on property values. This may not go far enough to appease ratepayers disgruntled with the 2017 revaluation.
The Chancellor also recognised the transition from a bricks and mortar economy to a more digital one. Mr Hammond confirmed that in the medium term he would be looking at a better way to tax the digital economy to achieve fiscal fairness vis-à-vis more traditional forms of business. This will be welcomed by businesses which rely heavily on property and whose market share has been eroded by those whose model is more electronically based and who are consequently less exposed to business rates liability.