Included within the Autumn Statement were a whole heap of measures aimed at some of the challenges (and opportunities) that businesses will be faced with over the remaining period of this government.
I’ve grouped the headline announcements together to make them a little easier to digest and added a few comments at the end for the purposes of context.
From 1 April 2023, Business Rates bills in England will be updated to reflect changes in property values since the last revaluation in 2017. The Government said that it was introducing a package of targeted support worth £13.6 billion over the next five years which is intended to support businesses as they transition to their new bills, protect businesses from the full impact of inflation, and support high streets.
Multiplier Freeze: The business rates multipliers will be frozen in 2023-24 at 49.9 pence and 51.2 pence.
Transitional Relief Scheme: Upwards Transitional Relief will support properties by capping bill increases caused by changes in rateable values at the 2023 revaluation. In a very significant departure, this support will for the first time be funded by the Exchequer rather than by limiting bill decreases, as at previous revaluations. The ‘upward caps’ will be 5%, 15% and 30%, respectively, for small, medium, and large properties in 2023-24, and will be applied before any other reliefs or supplements.
Retail, Hospitality and Leisure Relief: Support for eligible retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% business rates relief up to £110,000 per business in 2023-24. Around 230,000 RHL properties will be eligible to receive this increased support worth £2.1 billion.
Supporting Small Business Scheme (SSBS): Bill increases for the smallest businesses losing eligibility or seeing reductions in SBRR or Rural Rate Relief (RRR) will be capped at £600 per year from 1 April 2023.
Improvement Relief: The Government announced a new improvement relief to ensure ratepayers do not see an increase in their rates for 12 months as a result of making qualifying improvements to a property they occupy. This will now be introduced from April 2024. This relief will be available until 2028, at which point the government will review the measure.
An HM Treasury-led review of the Energy Bill Relief Scheme (EBRS) will determine support for non-domestic energy consumers, excluding public sector organisations, beyond 31 March 2023.
The Government has today published terms of reference for the review, with the findings to be published by 31 December 2022. While the Government recognises that some businesses may continue to require support beyond March 2023, it has said that the overall scale of support it can offer will be significantly lower, and targeted at those most affected to ensure fiscal sustainability and value for money for the taxpayer.
The Chancellor further announced that £6.6bn will be spent over the course of this parliament on energy efficiency measures, with a further £6bn from new government funding to be made available between 2025 and 2028.
An Energy Efficiency Taskforce (EETF) will be set up and charged with delivering energy efficiency across the economy – for households, businesses and the public sector. The government’s ambition is to reduce the UK’s final energy consumption from buildings and industry by 15%, by 2030 (compared to 2021 levels), and bring down energy bills.
Further details will be announced by the Business Secretary in due course, and we will be monitoring developments to assess their relevance to the retail industry, and where there are opportunities to engage.
Online Sales Tax (OST)
Following its consultation, the Government has decided not to introduce an OST. The Government said that its decision reflects concerns raised about an OST’s complexity and the risk of creating unintended distortion or unfair outcomes between different business models. A response to the OST consultation will be published shortly.
National Living Wage
The UK National Living Wage for people over 23 to increase from £9.50 to £10.42 an hour from next April (a 9.7% rise). Other NMW rates will also increase at differing rates.
Embracing the Future
The Government will refocus the Investment Zones programme to catalyse a limited number of high-potential clusters, working with local stakeholders, to be announced in the coming months. The existing expressions of interest will therefore not be taken forward.
The Chancellor also announced the Digital Markets, Competition and Consumer Bill to provide new powers to the ‘Digital Markets Unit’ (DMU) in the CMA to foster more competitive digital markets; make changes to the competition framework that will include streamlined decision making and updating merger and fine thresholds; and protect consumers in fast-moving markets by tackling ‘subscription traps’ and fake reviews online.
The Government will review retained EU law to identify changes that can be made over the next year with the greatest potential to unlock growth in key growth industries – digital technology, life sciences, green industries, financial services, and advanced manufacturing. The government will also task the Government Chief Scientific Adviser and National Technology Officer (Sir Patrick Vallance) to lead work to consider how the UK can better regulate emerging technologies, enabling their rapid and safe introduction.
What does it all mean?
There are a number of positives that can be drawn from the statement, many of which the MIA has been lobbying on for the last couple of years.
I suppose the biggest is the beginning of some long overdue reform for the Business Rates system, a hot topic since it became obvious this was skewing the costs differential between online and high street retail.
The abolition of the downward transitional relief cap is very welcome and means that businesses whose bills go down as a result of property revaluation will see that benefit straight away, whilst those that increase will continue to be staggered. This should benefit around 300,00 properties and help to address the imbalance of tax on ‘bricks vs clicks’.
The multiplier will continue to be frozen, and new for 2023-24 is an extension of rate relief to the Retail space of 75%.
As such total business rates paid by the retail sector is estimated to fall by 20% but will rise 27% for large distribution warehouses to reflect the growth in the online sales sector.
The online sales tax decision is unsurprising, but at the same time, the clarity is welcome as it has clearly pushed forward some of the action around business rates. What is also unsurprising but less welcome is the uncertainty over the continuation of support for non-domestic energy costs.Autumn Statement 2022