Overview of the Latest Changes to Business Rates
Business rates are a critical aspect of financial planning for all UK businesses operating from non-domestic properties. Recent changes announced by the UK and devolved governments have significant implications for businesses across the country. Understanding these updates is essential to manage your financial obligations and optimise your cash flow effectively.
The business rates system varies slightly across England, Scotland, Wales, and Northern Ireland. Each region has its own multipliers and relief schemes designed to support different types of businesses. Keeping abreast of these changes ensures you can take advantage of all available reliefs and make informed decisions about your property investments.
Impact of Business Rates Changes in England
In England, business rates are calculated using two multipliers: one for small businesses (properties with a rateable value below £51,000) and one for standard businesses (properties with a rateable value above £51,000). For the 2024/25 financial year, the multipliers are set at 49.9p for small businesses and 54.6p for standard businesses.
The 2024 Autumn Budget introduced several changes for the 2025/26 financial year. Notably, retail, hospitality, and leisure relief has been extended but reduced from 75% to 40%. This change means affected businesses will see a significant increase in their business rates bills. Additionally, the small business multiplier will remain frozen at 49.9%, while the standard multiplier will rise to 55.5%.
The Government has also announced plans to introduce two permanently lower multipliers for retail, hospitality, and leisure properties with rateable values below £500,000 starting in 2026/27. This initiative aims to create a fairer system and level the playing field for high street businesses by imposing higher multipliers on properties with a rateable value of £500,000 or above.
Implications for Businesses in Scotland
Scotland's business rates system includes three multipliers: basic (49.8p for properties with a rateable value up to £51,000), intermediate (54.5p for properties with a rateable value between £51,000 and £100,000), and higher (55.9p for properties with a rateable value above £100,000).
The Scottish Government's 2025/26 Budget introduced several changes. The basic property rate will be frozen at 49.8p, while the intermediate and higher property rates will increase to 55.4p and 56.8p, respectively. Additionally, a 40% relief will be introduced for hospitality businesses, including grassroots music venues with a capacity of up to 1,500, eligible for the basic property rate. This relief is capped at £110,000 per business.
The Small Business Bonus Scheme (SBBR) remains a valuable relief option for businesses in Scotland, offering up to 100% relief for businesses with a combined rateable value of £35,000 or less and individual premises with a rateable value of £20,000 or less.
What to Expect for Business Rates in Wales
Wales operates a single multiplier for all properties, set at 56.2p for the 2024/25 financial year. The Welsh Government's 2025/26 Budget has capped the increase to this multiplier at 1%, which is lower than the 1.7% increase based on September CPI.
Retail, leisure, and hospitality businesses in Wales can benefit from a 40% relief, capped at £110,000 per business. The Small Business Rates Relief scheme provides 100% relief for businesses with a rateable value up to £6,000, with a tapered relief for properties with a rateable value between £6,001 and £12,000. This relief is subject to a maximum of two properties per business in each local authority.
Northern Ireland's Business Rates: Key Updates
Northern Ireland uses two multipliers: the district council rate set by district councils and the regional rate set by the Northern Ireland Executive. For 2024/25, the regional rate is 29.02p, and district council multipliers range from 25.69p to 38.22p, resulting in a cumulative multiplier between 54.71p and 67.24p.
The Northern Ireland Executive has announced the creation of a new valuation list for calculating business rates from April 2026. Finance Minister Dr Caoimhe Archibald has also initiated a comprehensive Strategic Review Cycle of all rates, prioritising the policies of the Small Business Rate Relief Scheme and Non-Domestic Vacant Rating exclusions.
Tips for Managing Cash Flow and Claiming Reliefs
Managing cash flow effectively in light of these changes is crucial for businesses. Here are some practical tips:
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Regularly Review Your Rateable Value: Ensure your property's rateable value is accurate. If you believe it is too high, you can challenge it through the Valuation Office Agency in England and Wales, Scottish Assessors, or the Commissioner of Valuation in Northern Ireland.
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Claim All Eligible Reliefs: Familiarise yourself with the various relief schemes available in your region. Ensure you are claiming all the reliefs your business qualifies for to reduce your business rates bill.
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Adjust Cash Flow Forecasts: Incorporate the changes in business rates into your cash flow forecasts. Plan for any increased costs due to reduced reliefs or higher multipliers to avoid cash flow issues.
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Consider Property Investments Carefully: When starting to trade from a new property, consider its rateable value and the potential reliefs available. Choose properties that offer the most favourable business rates conditions.
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Seek Professional Advice: Consulting with experts like TaxAssist Accountants can help you understand the implications of business rates changes and ensure you are maximising all available reliefs. A free, no-obligation consultation can provide valuable insights tailored to your specific circumstances.
Staying informed and proactive in managing business rates can help mitigate the financial impact on your business. With these tips and a good understanding of the latest changes, you can navigate the evolving landscape of UK business rates successfully.
