Improvement Relief for Non-Domestic Rates (NDR). The UK Government is taking steps towards fostering economic growth and encouraging property improvements with the introduction of Improvement Relief, set to come into effect on 1st April 2024. Recognising the concerns of businesses regarding the Non-Domestic Rates (NDR) system, the government aims to remove a significant barrier to investment in property enhancements.
Many businesses have viewed the system as a potential disincentive to investing in property improvements, fearing that any resulting increase in a property’s rateable value could lead to a higher business rates bill. In response to these concerns, Improvement Relief is being implemented to ease the burden on ratepayers and provide a supportive environment for business growth.
Supporting Business Investments
Improvement Relief is specifically designed to assist ratepayers who invest in improvements to their non-domestic properties to enhance their business operations. The relief aims to mitigate the impact of a resulting rateable value increase on NDR liability by offering a 12-month respite. During this period, businesses can enjoy relief from the increased tax burden, allowing them to reap the benefits of their investments without immediate financial strain.
Timeline and Duration
Businesses can start benefiting from Improvement Relief on April 1, 2024, with the relief available up to and including March 31, 2028 (with qualifying works completed by that date benefitting from 12 months of relief). This four-year timeframe provides ample opportunity for businesses to plan and execute property improvements, knowing they can take advantage of the relief during the critical first year post-completion.
Eligibility
The relief’s eligibility is contingent on meeting two conditions:
- Qualifying works condition: the works must either increase the building’s area, enhance its physical condition, or introduce rateable plant and machinery to the hereditament. Notably, newly constructed, or refurbished hereditaments (that exited the rating list during the works) won’t qualify, and a mere change of use or the addition of land is also excluded from eligibility.
- Occupation condition: necessitates continuous occupancy by the same ratepayer since the qualifying works began, preventing the support from being redirected to landlords, developers, or businesses that have merely inherited improvements from a previous occupier.
Calculating Relief
The relief is applied by calculating the chargeable amount of NDR for the relevant property as if the rateable value in the list for the day concerned is reduced by the increase in rateable value attributable to the eligible improvement works. This strategic approach ensures that businesses and ratepayers can realize the advantages of their improvements before facing an augmented NDR bill.
Improvement Relief for Non-Domestic Rates (NDR)
For more detailed information and guidance on Improvement Relief for Non-Domestic Rates (NDR) or any other matters relating to business rates, we are always delighted to have an initial conversation to see if we can help. Please contact us at [email protected].
