The Chancellor has used his Autumn statement to address business rates support, outlining measures that will help a raft of small companies but that will have limited benefits to a number of medium to larger firms according to property experts.
The government during and in the aftermath of the pandemic offered a range of help around business rates, which are are charged on most non-domestic properties, like shops, pubs, warehouses and offices. Jeremy Hunt today said: "It is not possible to continue with temporary support measures forever."
But what will be offered is a business rates support package worth £4.3 billion over the next five years to help high streets and small businesses. That comprises a rollover of 75% retail, hospitality and leisure relief for 230,000 properties and a freeze to the small business multiplier.
Around 230,000 retail, hospitality and leisure properties will receive the 75% relief, up to a cap of £110,000 per business, on their business rates bills for 2024-25.
Organisations that count small firms as members welcomed the update. Tina McKenzie, policy chair at the Federation of Small Businesses said: "Business rates are one of the absolute worst taxes faced by small firms. Size matters when it comes to rates, and the Chancellor is absolutely right to have concentrated his firepower on helping the smallest firms at the heart of so many communities."
Kate Nicholls, the chief executive of trade body UKHospitality said the move to freeze the small business multiplier "will help those most vulnerable keep the lights on".
But she also pointed out that standard multiplier rising by 6.4% will see businesses representing almost two-thirds of the sector’s trade still facing a £150 million rates hike.
Nicholls added: "This will only put more pressure on consumer prices and inflation, at a time when businesses are still grappling with high costs of energy, food, drink and wages."
Real estate advisory group Gerald Eve calculates freezing business rates for those with a rateable value (RV) less than £51,000 should support around one million businesses, with a further 740,000 already benefitting from 100% small business rates relief.
But the firm added that around 220,000 ratepayers will see their bills rise in line with September’s CPI figure of 6.7%, adding £1.66 billion to those 200,000 ratepayers’ bills, or £8 billion over the next five years.
Measures to provide relief for small businesses are welcome but only scratch the surface.
The British Property Federation's Melanie Leech said: “Measures to provide relief for small businesses are welcome but only scratch the surface. The Chancellor should have gone further and frozen the multiplier for all businesses to prevent the unsustainable burden on the high street rising even higher.”
Peter Mace, head of central London retail at property agent Cushman & Wakefield said:“In reality, today’s announcement on business rates is only eating at the edges of a fundamentally flawed system. Business rates are arguably the most pressing issue facing the retail, hospitality and leisure sectors."
Paul Noble, a partner at accountancy company Blick Rothenberg said: “Whilst a cut in business rates will be welcomed by hospitality and retail businesses the effect in London will not be as effective compared to other parts of the UK with lower property prices. Added to this many of these businesses in the retail and hospitality capital will have concerns over the increase in staffing costs through the rise in the National Living Wage.”
