From 1 July 2021, and for the remaining nine months of the financial year, the relief from business rates is being reduced from 100% to 66%. This is up to a limit of £2 million per business for properties that were required to be closed on 5 January 2021, with a lower cap for businesses that have been able to stay open.
According to Altus Group, this means affected properties will be impacted by around £5bn in tax liabilities for the rest of the tax year.
Accountancy Daily estimate that around 395,000 businesses benefited from the rates holiday over the last 15 months, saving them collectively around £13.8bn.
To provide businesses with a sustainable platform for recovery from the pandemic, it is important that business rates are aligned with the true current rental value of commercial properties.
The Government has recently published a proposal to re-evaluate the business rates system in England – making it fairer and more responsive, with increasingly frequent property revaluations.
This consultation will form one part of the Government’s Fundamental Review of Business Rates, which will be published later this Autumn. The review will be wide-ranging, taking into account all aspects of the current business rates system, as well as exploring the potential strengths and weaknesses of alternative property and online taxes put forward as replacements for rates.
It is proposed that, under the new system, revaluations will take place every three years, instead of every five. This would ensure that business rates more effectively take into account changing economic conditions and would deliver other key benefits for ratepayers including more accurate valuations, and greater transparency about how their rateable value has been determined.
The next revaluation is due to take effect in 2023 and, in order for this to reflect the impact of Covid-19, will be based on property values as of 1 April 2021.
The open consultation on the Fundamental Review of Business Rates can be viewed here. The consultation closes on 24 August 2021.