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. The report was not intended to include non-domestic rate performance matters, as this was covered within the Performance Update reported to Joint Committee today.

Decision

That the content of the report be noted.

Alternative Options Considered and Rejected

None.

Reason for Decision

The report included some of the changes announced as a result of the Governments financial support provided to businesses in the form of business rates relief. The report also focused on the financial impact of recent appeals and reductions to rateable values.

The following updates were noted:

NDR Changes and Significant Reliefs/Discounts

At the Autumn Statement on 22 November 2023, the Chancellor announced that the Government would continue to provide a package of business rates measures to support businesses in England.

• The retail, hospitality and leisure relief would continue for 2024/2025 at 75% up to £110,000 per business

• A freezing of the small multipliers for a further year at 49.9p and an increase in the standard multiplier from 51.2p to 54.6p

Retail, Hospitality and Leisure Relief 2023-24

Eligibility criteria for the Retail, Hospitality and Leisure Relief was set out by the Department for Levelling Up, Housing and Communities (DLUHC) and issued to Local Authorities on 20 December 2021, with no changes to the qualifying criteria for the year 2023/24. The table at paragraph 5.5 of the officer’s report reflected the significant reduction in the amounts awarded in the last three years (previously known as the Expanded Retail Discount (ERD) scheme), with an estimate on the award to be granted in 2023/24.

Potential reductions to rateable values were contained within paragraph 6, which included fire stations, hospitals, museums and hotels occupied by asylum seekers.

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 came into force on 1 April 2023, the next being 1 April 2026 and so on.

·         The process of revaluation started approximately 2 years before the new valuations came into force. For the revaluation due on 1 April 2023, the rateable value would be assessed based on the rental evidence on 1 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.

Heat Network Rate Relief Scheme

The Government had published the guidance for Local Authorities on the operation of the Heat Network Rate Relief Scheme for 2023/24, substantially unchanged from 2022/23. Local Authorities were to continue to deliver the discretionary relief using their discretionary powers for 2023-24 until the relief was made mandatory through the Non-Domestic Rating Bill. The relief was targeted at hereditaments used wholly or mainly as heat networks with its own rating assessment, to provide relief for those networks generating from a low carbon source to ensure the policy supported decarbonisation.

Business Rates Avoidance and Evasion Consultation

In the Spring budget on 15 March 2023, the Chancellor announced that the government would consult on measures to tackle business rates and avoidance and evasion.

A consultation paper was provided in July 2023 with a target date of 27 September 2023 for responses.

The topics that formed part of the consultation were:

1.    Measures to reform rates on unoccupied properties

2.    Wider business rates avoidance and evasion

3.    ‘Rogue’ agents

The Shared Service partners would be responding to this consultation.

Non Domestic Rating Bill – Royal Assent 26 October 2023

This bill would make a number of changes to Non Domestic Rating .

One of the changes removed the 6 month backdating rule for discretionary rate relief decisions in England.

The Act created section 47(6A) which said that a decision, by a billing authority in England, with regards a day was invalid if the day fell before 31 March 2023 and the decision was made more than 6 months after the end of the financial year to which it related, i.e. the backdating rule would not apply to decisions in respect of 2023-24 onwards.

This was likely to mean that with effect from 1 April 2024 decisions would be made on discretionary reliefs fully retrospectively (in respect of the financial year 2024/25 onwards...." )

The other significant change was the decoupling of the multipliers and, in effect, the abolition of the small business supplement from 1 April 2024.

This meant that Government could choose to raise the two multipliers by different amounts.

This was going to require extensive discussions between the government and the software suppliers as to how this required data could be extracted before the Local Authorities had to issue the return for the NDR1 (assessment for the rating income for 2024) which was due on 31 December 2023.

The bill also paved the way for data sharing between the VOA, HMRC and billing authorities. The authorities already had a sharing agreement with the VOA but due to the changes with what they could now share, it was expected that a new sharing agreement and protocol would be announced by the VOA.