Why is the 2023 revaluation important?
Business rates are a form of tax, and as with any tax, the amount paid must be correct and fair. This revaluation marks the start of a government commitment to shorter, more accurate, rating periods which will be three years in length. Historically, and notwithstanding the extensions applied to both the 2010 and 2017 revaluations, revaluations have been five years in length.
The commitment to shorter revaluations is intended to ensure rateable values are more accurate and reliable, and that the business rates paid are accurate. Coming into a shorter revaluation cycle is likely to be positive but will only work if the discrepancies of the 2010 and 2017 rating periods are corrected and ratepayers ensure that FORs are completed accurately and that the base information used to submit them is correct.
That means getting a professional to submit a check in the current rating period so that, whatever happens in the future, the foundation information for the 2026 rating period (when checks will be abolished) is correct.
What Does the Revaluation Mean for You?
The true impact of Revaluation will not be known until the VOA publish the Draft Rating List… which was due to be published on 1 October 2022, but now looks likely to be released on 31 December 2022.
The one thing which we can anticipate with some degree of certainty is that the level of inflation will increase the Business Rates Multiplier — seemingly by an eye watering 10.1%.
Beyond that, the revaluation itself offers an incredible set of Challanges for Ratepayers across England and Wales.
Rateable Values themselves, in addition to the suggested increase in the multiplier, also look set to increase… a ballon in the industrial sector looking set to push all rateable values to previously unseen levels… some estimates indicate rateable values might increase by as much as 34%.
Coupled with the increase in the multiplier, there may be some difficult times ahead unless the government can make the tough call, and rather than adopting the full 10.1% inflationary figure in the multiplier, acknowledge an already challenging period and make the choice to intervene and fund a cap, or freeze it altogether.
The forecast is that there will be an increase of £2.7bn on Business Rates Demands in England, meaning Business Rates revenue will increase to £159bn over the next 5 years… a cumulative increase of £24.6bn unless action is taken.
The timing of the increase unfortunately coincides with the end of the pandemic rates relief for businesses within the Retail, Hospitality and Leisure sectors, at a time when we expect to see the largest annual increase in Business Rates liability for 32 years. It will also further coincide with a number of other current economic headwinds, such as declining consumer confidence and record high energy prices.