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Publish date

27 September 2023

Proposed changes to business rates system

Key reforms being brought by the new Non-Domestic Rating Bill promise to support businesses by modernising the system to incentivise property improvements and support more frequent revaluations.

The Non-Domestic Rating Bill 2022-23 (the Bill) is schedule to start its third reading in the House of Lords in October and is likely to come in force early next year. The Bill introduces a number of measures which aim to make the business rates system fairer and more responsive to market changes. Four key changes that are of note to the landowners and occupiers are summarised below.

Frequency of revaluation of business rates

Business rates are based on the rateable value of a property, which is broadly speaking its annual rental value.

The revaluation of non-domestic business rates is to be made more frequent, shortening it from the current five yearly revaluation to a three-yearly revaluation. The three year cycle is to start from this year’s revaluation date of 1 April 2023, meaning that the next revaluation will take place in 2026.

This shortened revaluation period is intended to ensure that the non-domestic rating list reflects market changes and in turn improves fairness in the system. This means that landowners and occupiers should pay lower rates if the market falls during the revaluation period.

New and amended reliefs

With the aim of supporting business investment and growth the Bill introduces new improvement reliefs. These give occupiers a twelve month grace period, which will kick in after the property has been improved.  During this period, a ratepayer will not be liable for any increase in rateable value of the property resulting from a qualifying improvement. What constitutes a qualifying improvement is to be specified in regulations (a consultation on draft regulations closed on 28 August 2023).The relief is scheduled to commence from 1 April 2024 and will apply to qualifying improvements completed by 31 March 2028 (at this point the government will review the scheme and consider whether this deadline is to be extended). The relief will make it easier for businesses to invest in improvements and the upgrading of their property. However, this relief will not extend to new construction or refurbishment. Its aim is to help existing businesses who invest in improvements and who remain in occupation of their property. It is not certain at this point whether the improvement relief will apply where the rates are paid by an owner who is not in occupation; ‘occupation’ will be defined in the new regulations and hopefully this will bring some clarity on this point.  This relief will be welcomed by owners and occupiers seeking to comply with MEES. After all, in the current financial climate, owners and occupiers are less likely to make improvements to their properties if this immediately increases the level of business rates they are required to pay. The relief will ease cash flow constraints whilst improvements are made.

There will be also a new mandatory business rates relief for low carbon heat networks. Where a property is wholly or mainly used as a heat network, business owners will be able to benefit from 100% relief from business rates. Making the heat network relief mandatory will bring more certainty to owners and occupiers of such properties, as the relief is currently discretionary.

The Bill also makes some changes to transitional relief. Currently, where a periodic revaluation of rateable values takes place, the Secretary of State is required to make regulations providing transitional relief. Previously some of this relief was funded by placing downward transitional relief caps on rate payers whose rateable values were revalued at a lower figure. The downward caps basically restrict falls in bills to raise revenue, meaning that business rates could not fall below certain figure. These so called downward caps will be abolished and the transitional relief will instead be funded by the Government (although the Secretary of State must still ensure that the transitional arrangements are revenue neutral). A business with a decreased rates valuation will immediately benefit from the full reduction in their bills (as downward caps will no longer apply).

There is also good news for the owners and occupiers of certain rural properties, such as qualifying post offices, general stores or food stores. Such properties will be entitled to mandatory 100% relief from business rates, which currently is only discretionary.

Duty to provide information to Valuation Office Agency (VOA)

Ratepayers will have a new statutory duty to provide notifiable information to the VOA about themselves. This would include an up to date taxpayer reference number, the properties or parts of the property in respect of which they are liable for business rates as well as information about their business. The ratepayer will also be required to provide the VOA with an annual confirmation within 60 days of the start of the financial year that they have either provided that notifiable information or that they are not required to do so. However, the annual confirmation will not be introduced until the government is satisfied that “it will be sufficiently straightforward for ratepayers to complete”.

Business owners will also be obliged to provide details of their taxpayer reference number to HMRC within 60 days of becoming a ratepayer, and to update that information as and when it changes.

The Bill will permit the VOA to impose financial penalties when a ratepayer provides no information or misleading information. Furthermore, it is a criminal offence where false information is provided. Ratepayers will, therefore, need to ensure that any information submitted to the VOA is correct.

Digitalising Business Rates

There will be a new online service which will help businesses to navigate the business rates system. This service will be used by ratepayers to provide the necessary information mentioned above to the VOA. The new online service will also connect the business rates information held locally by billing authorities with HMRC tax data. The system will likewise give HMRC the ability to share information with the billing authorities. The availability of better data could facilitate a more targeted design of business rate relief schemes.

The new online system will also enable ratepayers to request information that is taken into account when determining their property’s rateable value. Though such information will only be disclosed by the VOA where reasonable to do so and if it does not contravene data protection legislation.


The above changes will definitely give some support to businesses by providing new mandatory reliefs, which will hopefully incentivise business owners to improve their properties. More frequent valuations, which the BPF have called for over a number of years will also make the system fairer. Whether it will be sufficient to address the balance between the high street and online vendors remains to be seen. Many still argue that business rates are not fit for purpose and further reform will be necessary. Would the Government have needed to launch its current consultation into Business Rates Avoidance and Evasion, if a different system were in place? It would seem however, that for now the Government are keen to preserve the business rates system in its traditional format.

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