2017 Budget Update

Key points contained in the Chancellor’s Budget Statement  of 22nd November 2017 relating to Business Rates

The switch to CPI from RPI in order to determine the annual increase in rates payments for properties outside of transitional relief will now take place two years earlier than planned. By bringing this change forwards from April 2020 to 2018, the Chancellor has ensured that rates bills in England will rise next April by 3% rather than the previously expected 3.9%.

The cost of this switch is estimated at £2.3bn over 5 years. In terms of detail on individual properties, however, this is a drop in the ocean; for example, a property with a Rateable Value of £100,000 will save a mere £430 on 2018/19 rates.

The Chancellor confirms that, after the next Revaluation, the cycle will become 3 yearly. This suggests Revals in 2022, 2025, 2028 and 2031 and so on, and this matches the new cycle in Scotland announced recently.

The Pub relief of £1,000 on pubs valued at less than £100,000 RV will continue for 2018/19.

You may have heard of the Staircase Tax, which is an emotive term (wish we had thought of it!) covering the changes to assessment following the Supreme Court decision in the Mazars case. If an occupier has two areas of accommodation, but they are separated by common parts or another tenant, they now have to each be assessed separately, with implications for loss of sole property reliefs like SBR, loss of allowances for configuration and possible increases to unit prices due to loss of quantum adjustments. The Chancellor now says he will legislate so that an occupier affected by this can have their original bill reinstated and backdated, if it so chooses. As ever, the devil will be in the detail and we don’t envy the civil servant drafting that clause.