Call for clarification as Budget bypasses business rates issues

Adrian Smith - calling for clarification.

BUSINESSES facing rates increases as a result of the controversial revaluation scheme will not receive any significant benefits from changes announced in the Budget, according to a specialist consultant in East Yorkshire.

Adrian Smith, founder of AS Rating, said suggestions that no business will be hit with an increase of more than £50 per month could be misleading. He condemned a plan to pay hardship relief through local authorities as “passing the buck” and he said the introduction of a £1,000 discount for pubs was “small beer.”

Adrian added that businesses eligible for a rates reduction will have to play a waiting game because of the slow pace of transitional rates relief.

Business rates were identified as one of the hot topics in the weeks before the Budget as the Chancellor was inundated with calls to act to protect firms from big increases.

Adrian, who founded AS Rating in 2000 after spending 25 years working for the Inland Revenue, said: “Most of the headlines from the Budget have been about the Chancellor’s plans to increase National Insurance but that will be a temporary distraction. When people look at the issue of business rates they’ll see he hasn’t really done anything to improve the situation.”

Adrian highlighted the Chancellor’s claim that businesses which lose small business rate relief will have their increases limited to £600 for the next year. He warned: “What the Budget Policy Paper actually says is that increases will be the greater of £600 or the level of the real terms transitional relief cap.

“So on that basis businesses which lose small business rate relief could end up paying increases of more than £600. It is a situation which is already causing confusion within local authorities and which will be even worse for business owners, and it needs clarification.”

Local authorities which have already set the levels of business rates due from 1 April now have the job of amending those amounts and will also be tasked with managing their share of the “discretionary relief” promised by the Chancellor.

Adrian said: “This is a case of the Chancellor passing the buck. The Chancellor will provide £300 million to help local authorities help out with hardship cases in their area but there is no information on how that will be allocated.

“If every local authority gets the same it will be worth less than £1 million each, and there is no indication whether the fund is available for one year or has to see people through the five years until the next revaluation. We can expect to see local authorities in a bidding war to secure funding which is inadequate for the problems that will emerge.”

Depending on state aid limits for businesses with multiple properties, pubs with a rateable value of up to £100,000 will be given a discount of £1,000 on their rates for one year, but again Adrian said the Chancellor has not gone far enough.

He said: “This shows the Chancellor recognises that the licensed trade faces major challenges, but this discount is no more than a sweetener. It works out at £83 per month. Is that really going to make a difference for a licensee who is struggling, whose beer prices are going up and whose customers are having to pay hundreds of pounds more in National Insurance?”