Who will benefit from the business rates revaluation 2023?

Business rates are a significant drain on resources for many UK businesses, especially in the middle of the current cost of living and energy crisis.

To calculate business rates, which are paid to your local council, the UK government uses the current rateable value of your property.

Every five years, they conduct a business rates revaluation to ensure you’re paying the correct business rates in line with new property rateable values.

The next revaluation is taking place in just a few weeks and will see commercial property landlords and tenants have their business rates recalculated based on these new rateable values.

In this blog, we will take a closer look at the business rates revaluation 2023 and what it means for businesses, exploring who will benefit and who won’t.

Let’s get started.

How are business rates calculated?

The rateable value is your commercial property’s estimated annual rental value on the open property market based on the property’s size, location, and use.

The business rates system takes your property’s rateable value in the current property market and multiplies it by a government-set multiplier called the Uniform Business Rate (UBR).

The government sets the UBR annually, expressed as a percentage of the rateable value. For example, if a property has a rateable value of £20,000 and the UBR is 51.2p, the business rates bill would be £10,000 per year (20,000 x 0.512).

What does the 2023 UK revaluation mean?

The last revaluation was conducted in 2017, and since then, many UK businesses have been paying business rates based on outdated valuations.

The 2023 revaluation will recalculate the rateable value of every commercial property in England, Scotland, and Wales. These new rateable values will then affect the business rates bill you must pay.

What does the 2023 revaluation change for businesses?

The revaluation will change the business rates that UK businesses pay to use or own commercial properties.

The change in business rates will depend on the new rateable value of your property, your local council’s multiplier, and any relief or exemptions that your business is eligible for.

If you see an increase in your property value, you may see a corresponding increase in business rates. On the other hand, if you see a decrease in your property value, you may see a reduction in business rates.

So, which one will it be? Let’s take a look at some predictions.

What does the 2023 revaluation change for businesses?

The revaluation will change the business rates that UK businesses pay to use or own commercial properties.

The change in business rates will depend on the new rateable value of your property, your local council’s multiplier, and any relief or exemptions your business is eligible for.

If you see an increase in your property value, you may see a corresponding increase in business rates. On the other hand, if you see a decrease in your property value, you might see a reduction in business rates.

So, which one will it be? Let’s take a look at some predictions.

What businesses will benefit the most from the revaluation?

Research from the Centre for Cities suggests that the revaluation will benefit businesses in cities and large towns in the North of England more than in the South.

The study indicates that cities such as Manchester, Liverpool, and Leeds will see the most significant falls in their rateable values, making it more attractive for businesses to set up in these areas.

Overall, the 2023 business rates revaluation will be a major boost for the UK’s leisure, retail, and hospitality industry, which will help support their post-COVID recovery and growth in the years to come.

Retail businesses

If you’re in the retail sector, the revaluation will likely bring you good news! Property agent Savills said the 2023 revaluation would reduce retail rateable values throughout England and Wales by around 10%.

The reduction in business rates is expected to save many retailers millions of pounds and provide a much-needed boost to the industry following a rough few years of COVID-related downturn.

Savills also notes that larger stores will see the biggest reductions in business rates in the region, of one-third, while smaller stores may only see reductions of under 10%.

This is because larger stores have been hit hardest by the pandemic, and the reduction in business rates is designed to support these struggling businesses.

Leisure and hospitality businesses

The Centre for Cities also suggests that the retail and hospitality sectors will be among the biggest winners of the revaluation, with significant reductions in business rates expected.

One major factor that will contribute to this is the “retail discount” that will be available to businesses in the leisure and hospitality industry.

The 50% relief offered to retail, leisure, and hospitality occupiers in 2022 as a result of Covid will be increased to 75% relief in 2023. This relief is subject to a cap of £110,000 per business (not per property).

Want to learn more ways to cut business costs? Read our blog, “How your business can save money during the cost of living crisis.“

What businesses will the revaluation negatively impact?

Now that we’ve talked about who might benefit from the 2023 business rates revaluation let’s look at some businesses that the changes may negatively impact.

Office buildings

The Centre for Cities notes that some office-based businesses in city centres, such as law firms or insurance companies, may see an increase in their business rates due to the revaluation.

This is because the pandemic has caused a shift in working patterns, with more people working from home, which has reduced demand for office space in city centres.

Additionally, many offices have undergone significant renovations and upgrades over the past five years, so their rateable values are likely to increase.

High-value locations

Some businesses that have seen an increase in property value may also experience an increase in their business rates.

For example, businesses located in areas that have experienced a surge in property prices, such as London and the South East, could end up with higher business rates bills.

The Centre for Cities research suggests that these areas will experience the highest increases in rateable values, with London potentially seeing an overall increase of around 11%.

What can businesses do to minimise negative effects of the revaluation?

The 2023 revaluation could significantly impact businesses across the UK, particularly those in the office sector and in the South East of the country. However, there are steps that you can take to minimise the negative effects of the revaluation:

Move

One option is to explore alternative locations for your business premises. As mentioned, cities in the North of England will likely have the largest fall in their rateable values.

Downsize

If you don’t need as much space as you have, consider downsizing or relocating to smaller, more cost-effective premises to reduce your rateable values.

Appeal

Another option is to appeal the new rateable values if you believe they are too high. The appeal process can be lengthy and costly, but it could result in a reduction in the rateable value and a subsequent decrease in business rates.

Want to learn more about reducing business rates? Read our blog, “Everything you need to know about business rates changes.”

Apply

Make sure you’re taking advantage of any available reliefs or exemptions to reduce your business rates bill, such as the small business rates relief and retail discount.

Did you know that 1 in 3 businesses are paying too much for business rates?

If you’re not one of the lucky ones experiencing a reduction in your business rates bills thanks to the revaluation, it’s vital you take steps to minimise the negative effects.

One very important step is having the experts evaluate your business rates to see if you’re paying too much.

Don’t forget: The deadline to receive a business rates rebate is the 31st March 2023, so if you want to reduce your business rates – you better hurry!