Business Rates and the Upcoming Business Rates Revaluation
A property’s business rates bill is based on rental values from the Antecedent Valuation Date (AVD) which for the current 2017 Rating List is 1 April 2015. The Valuation Office Agency (VOA) update these valuations at revaluation dates to ensure the rateable values stay accurate within the economic climate. As a result of the coronavirus pandemic, the next revaluation was postponed from 2021 to April 1st 2023, which allows for an April 2021 AVD. This revised revaluation date has been implemented to allow for more certainty to business premises occupiers whilst the Country recovers from the impact of the pandemic.
Rates Relief Scheme
Many property occupiers benefitted from a 100% rates holiday throughout 2020, which was implemented by the government as a result of the pandemic. The properties attracting this relief were, and continue to be, retail, leisure, hospitality and day nurseries. This grouping is an expansion of the original list of retail properties that were due to get 50% relief as part of guidance issued in January 2019. At that point retail had been defined as including a wide range of shops (including charity shops), restaurants, cafés and bars (among other uses). The relief was extended to cover hospitality and leisure properties including:
- Museums and galleries;
- Theatres;
- Historic houses and stately homes;
- Visitor attractions;
- Hotels and guest houses;
- Holiday homes and caravan parks.
Business Rates Revaluation
The consequences of the delayed revaluation can be seen by both occupiers and the Valuation Office Agency themselves. Commercial occupiers such as those in the retail and leisure sectors who have arguably been the worst affected by COVID-19, will have to continue paying business rates based on rental values set from 1 April 2015, which are typically significantly higher than they are now. As a result of this, rates, which usually equate to approximately 50% of rent, are likely to far exceed this figure.
Disadvantages of the postponed Revaluation can also be seen by the VOA whereby a further two years of 2017 Rating List appeals are to be dealt with, on top of the already existing backlog. This arduous task also coincides with compiling the new 2023 list.
It can be identified that certain sectors such as leisure, which are valued primarily on a receipts and expenditure basis, may be difficult to assess as trading accounts leading up to the new 1 April 2021 AVD will likely be unrepresentative of the actual circumstance.
Until the 2023 Rating List is released, we will be unable to see the full affects of the revaluation, but until then it is vital to ensure that those properties assessed under the 2017 List are correct to offset the new two year delay.
Contact us
To find out more about business rates, or to check if your rates are correct, please contact Christie Harvey on [email protected]
