Earlier this year, the Government announced a ‘Business Rates Reform’ to both modernise the system and support high streets and business communities up and down the country.
Business rates are a local tax charged to the majority of non-domestic properties, including the likes of shops, pubs, bars, restaurants, warehouses and factories, to name a few examples. These rates are the way in which a town or city’s businesses pay towards the cost of local services and infrastructure.
So, what does the latest ‘Reform’ look like? Well, within the latest Business Rates Review, the Government said it will create a fairer system that supports investment and is fit for the 21st century. It was announced in February this year that the Retail, Hospitality and Leisure Relief will be extended from April 2025 for a further year.
From April 2026 the Government also said it will move to a permanently lower multiplier for Retail, Hospitality and Leisure businesses with rateable values of below £500,000, funded by an increased multiplier for properties with rateable values of £500,000 and above. This means smaller independent businesses are likely to gain from the reform, while larger national chains may take the brunt of the additional funding requested. Therefore, it’s likely that bigger cities are likely to feel the hit when compared to towns such as Harrogate.
Some of the other key changes to the Business Rates system include:
- Digitalisation – The system will become digitalised by 2028 to enhance data sharing.
- Small Business Rate Relief – There will be a lower multiplier and discounts based on rateable value to support smaller businesses.
- Tackling Empty Property Relief – The Government said it plans to address any misuse of relief for empty properties around the country.
- Revaluation Frequency – Moving forward, there will be increased revaluations on a yearly basis.
- New Assessment Method – A new assessment of need and resource is also planned, building on the current framework.
The reform also involves an interplay of online taxes and the traditional business rates system, with the target of managing any imbalances and making the system more efficient.
These changes are expected to be phased in over a period of several years, with some aspects beginning in 2026.
Meanwhile, the Association of Town and City Management (ATCM) said businesses across the UK, along with the organisation itself, have been consistently frustrated by a lack of meaningful reform to business rates, despite the well documented flaws within the system.
The organisation said that these rates are a burden on businesses operating physical premises, creating an unfair and economically harmful system that fails to reflect the realities of the modern economy.
Finally, the ATCM said that this reform is long overdue, with a complete overhaul needed to create a clear, fair system for the nationwide business community.
As the BID in Harrogate, we consistently work hard to represent our town’s business community and share the Harrogate voice. This includes understanding business needs, responding and adapting where necessary in support of our town.
We act as the voice for our town on a local, regional and national level to ensure our town receives what we know it deserves, so subjects including Business Rates are important to us as we’re always keen to share feedback and lobby with the relevant organisations for the good of our town!
In our town we have an eclectic mix of both large national chains and smaller independent businesses, so we are fully aware that these changes within the latest ‘Reform’ are likely to impact our town and its thriving business circle!
If you have any questions surrounding the latest Business Rates Reform, please email our team on info@harrogatebid.co.uk