Spring Statement 2018: business rates revaluation accelerated

The Chancellor announced that the next business rates revaluation is to be brought forward by one year to 2021, four years after the last revaluation, so that ratepayers can benefit from three-year revaluations announced at Autumn Budget 2017 at the earliest point

Autumn Budget 2017 announced that the government would reform the revaluation cycle by increasing the frequency of valuations to every three years following the next revaluation. This improves the fairness of the business rates system as bills more accurately reflect properties’ current rental value and relative changes in rents.

The revaluation will be based on market rental values at 1 April 2019. The Valuation Office Agency (VOA) will continue to assess the rateable values of non-domestic properties for business rates. In 2016 the government issued a discussion paper on delivering more frequent revaluations. Respondents to the paper favoured continuing with VOA-led valuations. The government has decided not to introduce self-assessment or a formula model at this time.

The government has published a document providing a summary of responses to the 2016 discussion paper. This shows there was strong support for more frequent revaluations by the VOA, particularly from business groups and rating agents. Many respondents argued that more frequent revaluations would reduce the incentive to appeal because valuations would be closer to the market and live for a shorter time.

Most respondents were concerned that a self-assessment system could impose additional costs and burdens on businesses. Many made the point that while larger businesses would be able to bear this, it would be particularly felt by small and medium-sized businesses.

There was very little support for a formula option, with many respondents claiming that it would be impractical and create unfairness.

In its summary of responses, the government pledged it will ensure at the next spending review that the VOA is sufficiently funded to continue to carry out high quality valuations. In addition, efficient management of appeals will support the implementation of three-year revaluations.

Budget 2016 announced that local authority business rate systems will be linked to HMRC digital tax accounts by 2022. However, the government will delay implementation until after 2024 to prioritise the delivery of the next revaluation one year earlier than planned, and the move to three-year revaluations. The government will aim to implement this new business rate digital system at the earliest opportunity after the start of the three-year revaluation cycle from 2024.

Business rates: delivering more frequent revaluations summary of responses is here.

Report by Pat Sweet

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