Following the Autumn budget, the Government have introduced the Non-Domestic Rating (Multipliers and Private Schools) Bill which aims to put some of the measures announced into action. The Bill is, by definition, draft legislation which is subject to change but its likely the key fixtures will remain in place.
The Bill deals with two main issues:
The introduction of further multipliers; lower multipliers for retail, hospitality and leisure properties and a higher multiplier for properties with a rateable value above 500,000 and,
The removal of charitable rates relief for private schools.
Further multipliers
The Bill states that the lower multiplier can be at most 0.2 lower than the small business multiplier for the current year and the higher multiplier can be at most 0.1 higher than the standard multiplier for the current year.
This is set to take place from the start of the 26/27 financial year.
Further multipliers - potential impact
Using the current small business multiplier of 0.499, the lowest the retail multiplier can be is 0.299.
The result of this would be that a non retail property with a rateable value of 10,000 will pay £4,990 per annum before reliefs and a retail property with a rateable value of 10,000 will pay £2,990 per annum before any reliefs.
This equates to a roughly 40% discount and mirrors the value of 25/26 retail relief as announced within the Autumn budget.
Obviously, this is based on the assumption that the retail multiplier will be the lowest it can be, but it feels premeditated to marry the multiplier with the planned relief. It should also be noted that within the budget it was stated there would be a small retail multiplier and a standard retail multiplier. It is likely also fair to assume that the standard retail multiplier will be 0.2 lower than the standard general multiplier and equate to the same 40% discount.
Further multipliers - uncapped potential or a cliff edge approach?
At present, retail relief is capped at £110,000 per business. In contrast, theoretically at least, the multipliers are uncapped, meaning a retail business with a large portfolio will receive help across all their properties, potentially resulting in substantially more help.
There are a few caveats to this. Further, it was stated and is reaffirmed within the Bill, that hereditaments over 500,000 fall out of the scope of retail and will in fact be subject to an increased rate.
Assuming a standard retail multiplier 0.2 lower than the current standard multiplier of 0.546 (so 0.346) and a large multiplier 0.1 higher than the standard multiplier (so 0.646), there is a huge swing for even a very minor difference in size.
For example, a retail property with a rateable value of 495,000 could be paying £171,270 whilst a retail property with a rateable value of 500,000 could be paying £323,000. This is almost approaching double the amount paid for a 5,000 rateable value difference.
Rateable value | Current multiplier | Charge | Potential multiplier | Potential charge |
495,000 | 0.546 | £270,270 | 0.346 | £171,270 |
500,000 | 0.546 | £273,000 | 0.646 | £323,000 |
You'd expect this to balance out or ultimately be a net positive across larger retail companies portfolios with the flagship stores paying more but smaller properties receiving a discount- a handful of Tesco Expresses paying less could equal a Tesco Extra paying more.
However, companies which operate at a single but large premises such as department stores, theme parks or central London restaurants could be paying approaching 20% more despite being a category of business the Government is attempting to support.
Removal of charitable rates relief for private schools
The bill confirms the previously announced policy to remove rates relief for private schools. It had previously been suggested that schools providing full time education to students with Education, Health and Care (EHC) plans would remain eligible for relief and this has been confirmed by the bill.
Our thoughts and analysis on these changes can be read in our Business rates explained: Private school changes insight post.
Further reading:
The Business Rates Information Letter can be read here.
The full Bill as introduced can be read here.
The explanatory notes for the Bill can be read here.
If you have any questions, please get in touch with us on 0208 0950 990 or info@hollowaybond.co.uk.
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