The first Budget from Rachel Reeves failed to deliver the ‘abolishment of business rates’ once promised but significant changes are coming nonetheless.
Under the Conservatives, the promise of more frequent Revaluations (whereby the valuation date moves forward and values are adjusted to better reflect current market conditions) was already underway, as was the modernisation of the system so as to assist them in delivering this; involving the Digitalising Business Rates (DBR) project which seeks to match property level business rates data across English and Welsh Local Authorities with HMRC business level tax data and the introduction of a new information duty / ‘Duty to Notify’.
The current Government are progressing these changes, with a commitment to deliver the 2026 & 2029 Revaluations and a phasing in of Duty to Notify between 2026 and 2029. Coinciding with the planned completion of the DBR by March 2028 they hope to have a system that is “fit for the 21st Century” by the end of their first term.
They have also announced major changes for retail, hospitality and leisure (RHL) properties, with a move away from the complex system of multiple reliefs for differing scenarios and a move towards a new (more complex) system involving different multipliers for RHL properties with a rateable value (RV) under £500,000 and also under £51,000 from April 2026 and higher multipliers for all properties over RV £500,000 to fund it.
In advance of this there will be the phasing out of the current ‘Retail, Hospitality and Leisure Relief Scheme’ whereby eligible businesses, who can presently obtain up to a 75% discount on their bill, will only receive a reduction of 40% next year. This will have a direct impact on a number of businesses in the leisure sector, who will see a significant increase in their annual liability. Furthermore, with the draft legislation unclear as to how RHL will be classified going forward, there is presently considerable uncertainty as to who precisely will benefit from the lower multipliers come 2026.
While the RHL charging provisions will be very unwelcome to many, the Duty to Notify provisions may be the most burdensome of all changes occurring; amounting to self-assessment of sorts. The information duty will replace the current ‘requests for information’ sent out by the VOA every 2 – 3 years and instead require businesses to notify the Government of any physical, occupational or ownership changes within 60 days, as well as complete annual returns to confirm the current data they hold is correct. For large leasehold portfolios, properties valued by reference to their trade and complex plant & machinery based valuations (to mention just a few), this will prove to be a highly onerous task and will be difficult to comply with.
If you have any queries, our national business rates team are here to help, so please get in touch.