Business rates discretionary relief options
The government announced a revaluation of all properties that took effect from 1 April 2017, the last revaluation was carried out in 2010. The revaluation has resulted in a substantial increase in the rateable values of properties and a subsequent increase in business rates bills.
A system of transitional relief was introduced to make sure that businesses don’t face significant changes in any single financial year but are phased in as far as possible. However, many businesses are facing increases in their bills, even after transition relief is applied.
As part of the budget announcement in March 2017, the Chancellor announced that £300m will be allocated to local authorities in England over the next 5 years (£180m in 2017/18) to enable them to provide discretionary relief to businesses facing substantial increases in their bills.
Grant and Conditions
The amount allocated to the Council from the discretionary relief fund is as follows:
|
2017-18 Gross bill increase (£000s) |
Amount of discretionary pot awarded (£000s) |
|||
|
|
2017-18 |
2018-19 |
2019-20 |
2020-21 |
|
12,133 |
1428 |
694 |
286 |
41 |
The amount given to each local authority has been calculated by reviewing the number of businesses with a rateable value of less than £200k and facing a bill increase of more than 12.5% before any other relief is applied.
The amount allocated to an authority is the maximum amount that they will be compensated in each year for relief provided to businesses facing an increase in their bill as a result of the revaluation, which means that any relief provided to businesses in excess of this allocation will have to be funded by the authority.
The discretionary relief fund can only be used to support ratepayers facing an increase in their bills following revaluation.
Assistance under a “relief scheme” is regarded as State Aid. It will therefore be necessary to establish that an award under this scheme will not result in the business receiving more than €200,000 of this kind of aid in the last three years.
Consultation
The Council held two consultation sessions with local businesses to hear their views on the schemes under consideration. There was a good turnout at both sessions with some useful feedback provided, this feedback was taken on board and the schemes were revised so that they are more focused on smaller businesses who will be hit hardest by the revaluation changes and based on the consultation process the below scheme was finally chosen.
Chosen option
- Rateable value of £51k or less to receive 70% of the funding
- Rateable value between £51k and £200k to receive 30% of the funding
|
|
2017/18 |
2018/19 |
2019/20 |
2020/21 |
|
Grant Amount |
1,427,894 |
693,549 |
285,579 |
40,797 |
|
|
|
|
|
|
|
Rateable Value £51k or less |
70% |
70% |
70% |
70% |
|
Rateable Value between £51k and £100k |
30% |
30% |
30% |
30% |
|
Total |
100% |
100% |
100% |
100% |
|
|
|
|
|
|
|
Rateable Value £51k or less |
999,526 |
485,484 |
199,905 |
28,558 |
|
Rateable Value between £51k and £100k |
428,368 |
208,065 |
85,674 |
12,239 |
|
Total |
1,427,894 |
693,549 |
285,579 |
40,797 |
- Excluding empty properties
- Properties facing an increase of more than 12.5% in their bill before any reliefs and discounts applied and a net increase in their bill after reliefs and discounts when compared to the previous year
- Less than €200,000 State Aid in the current & previous 2 financial years
- Retaining a buffer of 5%
Any businesses meeting the above criteria would receive a discount towards the increase in their bill, the percentage discount that would be offered to businesses under this option is presented in the tables below:
Rateable Value £51k or less:
|
|
2017/18 |
2018/19 |
2019/20 |
2020/21 |
|
Grant amount |
999,526 |
485,484 |
199,905 |
28,558 |
|
Amount allocated |
949,303 |
459,031 |
187,970 |
26,356 |
|
Buffer |
50,223 |
26,453 |
11,935 |
2,202 |
|
% discount* |
87.10% |
19.20% |
5.40% |
0.60% |
|
Number of properties |
1,704 |
1,600 |
1,666 |
1,735 |
Rateable Value between £51k and £200k
|
|
2017/18 |
2018/19 |
2019/20 |
2020/21 |
|
Grant amount |
428,368 |
208,065 |
85,674 |
12,239 |
|
Amount allocated |
405,717 |
192,507 |
76,181 |
10,883 |
|
Buffer |
22,651 |
15,558 |
9,493 |
1,356 |
|
% discount* |
11.30% |
3.40% |
1.10% |
0.14% |
|
Number of properties |
422 |
433 |
444 |
458 |
* percentages quoted above are based on latest information available as at end of May 2017, actual percentage awarded may vary.
Key Considerations
A number of assumptions were made in calculating the impact of the options as some details are only confirmed by central government each year (business rates multiplier, small business threshold) as well as rateable value of properties, occupation status that can also change throughout any given year. Therefore, the allocation criteria will be reviewed on an annual basis.
A 5% buffer has been set aside to allow for any late changes to the rating list that may affect the amount awarded to individual businesses, this will allow for the fluid nature of business rates to ensure the relief scheme does not exceed the grant level. The grant will be allocated during each year in full.
The minimum discount to be awarded to businesses is set at £50 to avoid unnecessary administration costs.
