Retail and hospitality businesses are getting a 50% cut to their business rates bill for a year, up to a maximum £110,000.
The tax cut is worth £1.7bn, Rishi Sunak said today.
It is one of a number of measures announced by the chancellor in his autumn Budget speech to ease the business rates burden.
The business rates multiplier will be frozen for 2022-2023. It meant a tax cut for businesses worth £4.6bn over five years, Sunak said.
In longer-term measures, business rates revaluations will take place every three years instead of five from 2023 on, to keep the tax more up to date with the rental values on which it is based.
A new “green investment relief” would be introduced to encourage adoption of technologies such as solar panels, Sunak said.
‘Busines rates improvement relief’ will also be introduced from 2023, as recommended by the BRC. It means firms making property improvements will pay no extra business rates for them for a period of 12 months.
However, hopes of a more drastic long-term reduction in the business rates burden were not met in the chancellor’s speech.
“It would be wrong” to find the £25bn raised by the tax annually through “extra borrowing, cuts to public services or tax rises elsewhere”, Sunak said.
“So, we will retain business rates but with key reforms to ease the burden and create stronger high streets.”
Sunak’s announcement marks the outcome of a government consultation on business rates reform.
Vivienne King, chair of the Shopkeepers’ Campaign, said: “Today, the chancellor has betrayed the high street. He has broken the Conservative manifesto pledge by not reducing business rates as promised.
“The pledge on more frequent revaluations is simply a reannouncement of what Philip Hammond promised in 2017. We are deeply disappointed there is no commitment to annual revaluations so tax bills reflect the market property values.”
King added: “Moreover, the limiting of the 50% reduction up to a cap of £110,000 will only support individual or small groups of retail outlets; the brand multiples will not benefit from this reduction.
“The risks to the high street remain in place following this review. We should expect more retail bankruptcies and job losses on the high street in the months to come.”
BRC CEO Helen Dickinson also said the announcement “falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto”.
Dickinson said the move to a three-year valuation cycle was welcome but also “a clear acknowledgement that rates have fallen well out of kilter with the wider property market”.
“The freeze in the multiplier is positive, though the evidence is clear that the current rate – over 50% in England – is already far too high,” Dickinson added.
“We also welcome the property investment relief and green investment relief, both of which the BRC has called for, which will provide some support for much-needed investment in green technology and property improvements.”
However, like King, Dickinson said the 50% one-year reduction to business rates would do little to help larger firms thanks to the £110,000 cap.
It would “lead to the unnecessary loss of shops and jobs and fails to incentivise investment in all parts of the country”, she said. “This is bad news for every member of the public who wants a vibrant high street in their local community, with retail at its heart.”
John Webber, head of business rates at property consultancy Colliers, called Sunak’s reforms “disappointing”.
“The chancellor has made it clear he is determined to continue to raise £25bn from this tax and as a result his proposals only tinker with the system,” said Webber. “The measures suggested will not have a major impact on saving the high street in the longer term.”
NFRN national president Narinder Randhawa said: “While we broadly welcome the decision to freeze business rates and offer a 50% discount for one year, we will continue to push for long-term reforms to make the system fairer for the independent retail sector.”
British Property Federation CEO Melanie Leech said: “The package of measures the chancellor has announced on business rates relief will bring some welcome temporary relief to our high streets, but demonstrate how badly further, fundamental reform is needed.
“While a move to three-year revaluations is welcome, we continue to urgently call for annual revaluations. Businesses need to see long-term reductions in the rates they pay rather than short-term fixes.”