Business Rates Briefing - 2021 revaluation in England postponed by government
The 2021 business rates revaluation has today been postponed by government in light of Coronavirus (COVID-19). We hear from Richard Williamson, National Head of Rating, on his initial thoughts in relation to this announcement and what this means for businesses.
Government today announced that the proposed 2021 business rates revaluation in England has been postponed and will not be brought forward from 2022, as per previous government legislation.
You can read the announcement in full online here
There is no announcement yet as to when the revaluation will now take place, but clearly the law as it currently stands requires a revaluation in 2022. The Non-Domestic Rating (Lists) Bill 2019, currently before the House of Lords for its second reading, will now not complete its passage and will presumably be withdrawn.
In its press release, government refer to ‘stability for businesses’ being required. Communities Secretary Rt Hon Robert Jenrick MP said:
“We have listened to businesses and their concerns about the timing of the 2021 business rates revaluation and have acted to end that uncertainty by postponing the change. Now is the time for us to continue to focus on supporting businesses affected by the pandemic, including through our unprecedented package of almost £10 billion in business rates relief.”
Consequences of the decision
This decision is, in some respects, not a massive surprise given what still needed to be done in advance of a revaluation taking place next year - not least the issue of transitional relief for the next list. This matter was also due to be consulted on this spring but has not yet commenced. In addition, the fundamental review of business rates, which was to be factored in, also hasn’t commenced yet. So, time was very much running out for that process to take place in time. In its latest announcement MHCLG state:
“The government is continuing work on the fundamental 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. The call for evidence for the review will be published in the coming months.”
The initial terms of reference for this review were published back in March.
This announcement will certainly now give time for the issue of transition to be properly considered and for the fundamental review to be concluded and factored in too. But, the news of a postponed revaluation will certainly not be welcome by many ratepayers who were, before the COVID-19 pandemic, expecting rateable values (and therefore rates bills) to fall significantly next year. What we also don’t yet know is whether the original transitional relief scheme in England will be reinstated in 2021/ 22 nor whether the expanded rate relief (and other relief schemes) will also carry over into 2021/ 22.
Antecedent valuation date
One key issue for any future revaluation will be around the adopted antecedent valuation date – the date all properties are valued from – and whether this changes from the current date of 1 April 2019. It will be deeply unpalatable for many ratepayers to contemplate paying rates bills in 2022 based on a pre COVID-19 valuation date of 1 April 2019. But it is equally inconceivable that the government would adopt 1 April 2020 as a valuation date, right in the middle of the COVID-19 pandemic.
It Is therefore possible that the valuation date might be moved to 1 April 2021, but this is by no means certain, particularly given the current COVID-19 restrictions and a significant question as to whether the VOA would have enough time to do this. Anecdotally, we know that they have completed 96% of their draft 2021 list valuations reflecting current valuation date albeit we are ‘pre-influencing’ these values in several key areas currently. The fundamental review may prove to be much more fundamental than initially expected around the valuation date for a forthcoming revaluation.
Wales
There has been no announcement from the Welsh Assembly, but it is inconceivable that a revaluation in Wales will now proceed in isolation and we fully expect a similar announcement soon. Whether the Welsh government bring in any regulatory amendments to the appeal process in advance of the revaluation remains to be seen, as they remain on the ‘old’ system with no elements of the check, challenge, appeal process that currently applies in England.
Scotland
This announcement will not affect Scotland where the next revaluation is already scheduled for 2022 and there were no plans to bring this forward to 2021 north of the border.
This is an unexpected announcement by MHCLG but not entirely surprising in the circumstances. What is not certain is ‘what happens next’? Ratepayers will potentially understand the difficulties around delivering a 2021 revaluation given current issues but will be concerned that the agenda to reduce business rates and bring in more frequent reviews is, inevitably, going to be delayed. Furthermore, a postponement of the revaluation may keep liabilities artificially high in the short-term, albeit we have not yet had any further detail as to what is proposed for 2021/22.
For more information please contact Richard Williamson, National Head of Rating at GL Hearn
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