Hospitality businesses warned 'real hit' of business rates will come in April

By Georgina Townshend contact

- Last updated on GMT

Knock on effect: the amount of money raised from business rates is set to rise by £845m to £24.8bn during 2018/19
Knock on effect: the amount of money raised from business rates is set to rise by £845m to £24.8bn during 2018/19

Related tags: Business rates, Business rates in england and wales

Hospitality businesses have been warned that the "real hit" of business rates is going to come in April - and could total as much as £75m - a figure "significantly higher than last year".

The warning, from the Association of Licensed Multiple Retailers (ALMR), came at the same time as the Ministry of Housing, Communities & Local Government released figures that show the amount of money raised from business rates is set to rise by £845m to £24.8bn during 2018/19. 

Income from business rates will have climbed £3.2bn from £21.6bn in 2014/15 to the projected £24.8bn in the current financial year - a rise of 15% in four years. 

"These increases, along with a reduction in transitional relief, will hit some venues hard," said ALMR chief executive Kate Nicholls.

“The Government needs to act decisively and soon to address the fundamental problems in the rates system, to fulfil its commitments in it election manifesto and, more crucially, to safeguard against business rates spelling the end for venues working on every-tighter margins and increasing costs.

"The Treasury appears to be lowering expectations around any announcement of rates reform at the Spring Statement and will focus on providing a simple forecast, rather than unveiling any substantial policy changes.

"Nevertheless, the ALMR will continue to push the Government and hold it to account on its promise to reform the system."

Concerns raised

Concern has been previously raised that the Valuation Office Agency has reported a drop in the number of firms questioning​ their business rates bill, and that the new appeals system "makes it harder for companies to lodge challenges". 

Appeals under the new Check, Challenge, Appeal system launched last April reached 12,840 in the first nine months, compared to 169,300 appeals during the first full-year of the previous regime, according to the Valuation Tribunal Service (VTS).

According to the Altus Group, Britain’s largest ratings advisory firm, nearly 27% of all appeals were from firms in London, with 3,440 business premises instigating a check of their new tax calculations.
Firms in the south-east, where rateable values rose 9.33%, lodged the next highest amount of checks, with 1,930 firms appealing. 
However, in the north-east, where rateable values fell by 0.4%, there we’re just 390 appeals - the lowest amount.

Knock on effect

Robert Hayton, executive vice-president of business rates at Altus Group, said: “We have nearly £5bn of rateable value currently under instruction, with a view to bringing appeals where errors exist, and are making these regulations work for our clients.

“The early signs are promising, and incorrect tax assessments are being rectified."

The business rates overhaul on 1 April last year saw 1.9m properties in England revalued and left many businesses facing "crippling hikes", said the Altus Group.

Chancellor Philip Hammond sought to appease concerns over the rates revaluation, announcing a £2.3bn reprieve in the Budget by bringing forward plans to switch the inflation measure used to calculate annual increases.

He also revealed plans to reduce the period between revaluations to every three years and said he would extend a £1,000 discount​ on bills – for pubs with a rateable value of less than £100,000 – for another year until March 2019.

But he was condemned for not doing enough to support struggling firms, with many calling for a rates freeze and others demanding a full overhaul of the system.

Related topics: Legislation

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