It has today been announced that a revaluation of business rates will no longer take place in 2021.
Legislation had previously been introduced to bring the revaluation forward from 2022 to 2021 as part of the Government’s commitment to more frequent revaluations.
At revaluation, the Valuation Office Agency (VOA) adjusts the rateable value of business properties to reflect changes in the property market.
However, the revaluation of business properties is a revenue neutral process. This means that there will be both winners and losers following today’s announcements. The VOA uses rental information about business properties to work out its rateable value. With rents showing signs of decline in some sectors, some occupiers may have been expecting their business rates liability to decrease. As a result of COVID-19, and the time it takes the market to recover, rents and therefore rates may in fact be higher in 2022, increasing revenue as a result of the delayed revaluation.
Some businesses are already benefiting from a package of £10 billion in business rate relief as part of the government’s response to the economic impact of the COVID-19 pandemic and today’s announcement is against a wider backdrop of potential reform of business rates.
The government is currently undertaking a review of business rates with the key aims of reducing the overall burden on businesses, improving the current business rates system, and considering more fundamental changes in the medium-to-long term. If reform is implemented successfully, it will be welcome news for occupiers.
However, it remains to be seen if the Government will introduce further COVID-19 concessions for hard hit businesses in all sectors of the economy and introduce extended business rates holidays as demanded by more than 50 Property Groups today (£).