Agenda item

Purpose of Report

 

To provide the Shared Revenues and Benefits Joint Committee with an update on current issues within non-domestic rates, related to City of Lincoln Council, North Kesteven District Council and West Lindsey District Council.

 

Decision

 

That the content of the report be noted.

 

Alternative Options Considered and Rejected

 

None.

 

Reason for Decision

 

The report focused on the changes announced as a result of Covid-19 and the support provided to businesses in the form of relief, – as grants were not directly paid by the Revenues and Benefits Shared Service, these were not covered in this report. The report also focused on the financial impact of recent appeals and reductions to rateable values.

 

Focus for both Government and billing authorities since the last meeting of Joint Committee had been a continuing response to Covid-19 measures announced since 11 March 2020.

 

The following updates were noted:

 

Expanded Retail Discount

 

The Expanded Retail Discount (ERD), first announced in response to the Covid19 pandemic and its impact on specific business sectors, was set to continue for a fourth year in 2023/24. The level of relief available under the discount had varied over the four years under a number of other parameters.

 

For 2023/24 the Chancellor set out:

 

•       An increase in retail, hospitality and leisure relief from 50% to 75% up to £110,000 per business

 

•       A freezing of the multipliers for a further year at 49.9p (small business multiplier) and 51.2p (standard multiplier)

 

•       Historically at the beginning of every new Rating List there had been a transitional scheme which phased in a large increase in liability for the Non Domestic Rates and this was offset by phasing in large decreases in liability. However, the transitional scheme for 2023, phased in large increases but there was no phasing of decreases and those customers would feel the benefit of any reduction in their rateable value immediately.

 

•       The Supporting Small Business Relief scheme would cap increases at £600 a year for any business losing eligibility for some or all Small Business Rate Relief or Rural Rate Relief at the 2023 revaluation.

 

•       The scope of the discount for 2023/24 would return to pre-Covid-19 eligibility retail properties. Hospitality and leisure properties would continue to remain in scope, and the Rateable Value continued to be uncapped.

 

Properties that would benefit from the relief would be occupied hereditaments that were wholly or mainly being used:

 

a)    as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;

b)    for assembly and leisure; or

c)    as hotels, guest & boarding premises and self-catering accommodation.

 

Government would continue to reimburse LA’s that used their discretionary relief powers under Section 47 of the Local Government Finance Act 1988 (amended).

 

In terms of Expanded Retail Discount (ERD), the table at paragraph 4.5 of the officer’s report reflected the significant discounts awarded in the last three years along with an estimate on the award to be granted in 2023/24. The table also set out the level of discount applied, ranging from 100% to 50%, with 2023/24 at 75%.

 

Discount for Businesses Affected by Covid-19

 

On 25 March 2021, the Government announced funding of £1.5 billion for businesses affected by Covid-19. The detail of the scheme was announced on 15 December 2021 with funding amounts allocated for each authority of £2,711,060 for City of Lincoln Council, £1,719,343 for North Kesteven District Council and £1,408,044 for West Lindsey District Council

 

Brief guidance from the Government stated that Local Authorities would be responsible for designing the discretionary relief schemes that were to operate in their areas as detailed at paragraph 5.3 of the officer’s report.

 

Following discussions, guidelines for Lincoln, North Kesteven and West Lindsey, Covid Additional Relied Fund (CARF) schemes were agreed.

 

Round 1 applications closed on 31 March 2022 with those accounts that met the criteria of losses of 30% or more awarded 100% CARF relief for their 2021/22 liability.

 

Due to the low take up in Round 1, Round 2 of the application process was opened inviting businesses as advertised on social media to claim if they had 20% or more in losses by 31 July 2022.

 

Over the months February – September 2022, the Non-Domestic Rates (NDR) team in the Shared Service encouraged ratepayers to apply where they were able to evidence losses for the year 2021-22. The CARF scheme was advertised on social media and each of the Local Authority websites. Ratepayers were also contacted directly by the NDR team, helped by the Business Development teams.

 

Nationally, local authorities reported that they found it difficult to allocate this relief to ratepayers that may meet the scheme criteria, despite best efforts to identify and promote the scheme.

 

The final figures were detailed at paragraph 5.4 of the officer’s report.

 

Fire Stations and Hospitals - Potential Reductions in Rateable Value

 

On 4 December 2020, the Valuation Office Agency (VOA) advised all local authorities that they may start to see changes in the rateable values of hospitals and fire stations. These categories had been in discussion under the VOA’s Group Pre-Challenge Review (GPCR) procedure .Further detail was outlined at paragraph 6 of the officer’s report.

 

Court Buildings

 

On 20 May 2021 we received a further notification from the Valuation Office that there was a CPCR Challenge regarding Court Buildings. This had been completed on a representative group of around 30 Courts. The agreed basis resulted in average reductions of around 18% - 1970’s buildings may have higher reductions of around 28%. These reductions could go back to 1^st April 2017. These had now been amended as per the Valuation Office schedule.

 

Museums

 

On 8 June 2020, the Upper Tribunal (Lands Chamber) in the case of Stephen G Hughes (VO) vs Exeter City Council determined that the rateable value of the Royal Albert Memorial Museum was £1. The Court of Appeal had refused to allow the Valuation Office to Agency to appeal against this decision. This may be rolled out to other similar hereditaments.

 

Business Rates Review

 

The final report for a Business Rates Review was also published at the Budget. The Budget and the Review committed in the longer term to improvements to the Business Rates system – which included;

 

·         More frequent revaluations, moving to a revaluation every three years starting from the next revaluation which would come into force on 1st April 2023, the next being 1st April 2026 and so on.

 

·         The process of revaluation would start approximately 2 years before the new valuations came into force. For the revaluation due on 1st April 2023, the rateable value would be assessed based on the rental evidence on 1st April 2021. There would be a new duty on the ratepayer to provide the Valuation Office with the information

 

For each revaluation, the Government introduced a Transitional Relief scheme. Transitional relief limited how much a bill could change each year. As the NDR system was self-financing, historically these limits had limited both large increases and large decreases. In the Budget, the government announced a change to the Transitional relief scheme so that only increases were limited. For any reduction in the rateable value, a ratepayer would receive the full benefit of the reduction immediately.

 

A new relief would be provided to support investments in property improvements, 2023-2028 in the first instance. It was expected that this would include a 12 month exemption on an increase in the rateable value where a property was improved. However, the final detail of this was not known at this time and would be reported as soon as known.

 

There was a new exemption for eligible low carbon heat networks that were listed as separate properties on the rating list, to be available from 2023 to 2025. Unfortunately, again, the announcement was made without any of the detail being known and so, the finer detail of this would be reported as soon as this was known.