Autumn Statement: BNP Paribas Real Estate business rates reaction

Following the Chancellor’s Autumn Statement today, Emily Roberton, National Head of Rating at BNP Paribas Real Estate commented:

“Buoyed by recent economic figures, an ebullient Chancellor of the Exchequer introduced today’s Autumn Statement as the, “Autumn Statement for Growth”, in which he pledged to reduce debt, cut taxes and reward work. The tone was however, tempered as he increased business rates.

“Jeremy Hunt confirmed that the Uniform Business Rate (UBR) – the rate in the pound that is multiplied against a property’s rateable value in order to calculate a liability – could not be frozen for a fourth year in a row. From 1 April 2024 the multiplier is expected to increase from 49.9p to 53.2p in £1, reflecting the annual CPI figure at September 2023 of 6.7%.

“He also confirmed that the Small Business Rate Relief multiplier – which is added to the UBR of ‘large’ properties in order to pay for the relief granted to ‘small’ occupiers – is to be frozen at 1.3p. This means that premises with a rateable value of £51,000 or more will attract a multiplier of 54.5p in £1. Premises in Greater London with a rateable value of £70,000 or more attract an additional 2p in £1 for the “Cross Rail” supplement, which will mean their bills are based on 56.5p in £1. The City of London has unique powers to set its own rate and this is currently 1.2p, meaning a typical city office will pay 57.7p in £1 from 1 April.

“Whilst on the face of it this is disappointing news, it was expected. In last year’s Autumn Statement the Chancellor delivered a number of positive pledges, including the abolition of downwards transitional relief. These measures are all part of the wider piece, being the introduction of three yearly revaluations from April 2023 and further planned changes to the business rates system.

“A welcome commitment in today’s statement is the extension of the current Expanded Retail, Hospitality and Leisure Business Rates Relief scheme. The scheme operates a 75% discount in business rates up to a cash cap of £110,000 per business, although this threshold means that it is only of benefit to operators with a single property or a small portfolio of lower value property.”