Significant changes on the way for business rates in England & Wales: The Non-Domestic Rating Act

A significant change to the business rate process

The UK is set to embark on its biggest ever shake-up of business rates. The Non-Domestic Rating Bill was introduced into parliament in late March 2023 and has now received Royal assent.

Below are some of the highlights and the impact on ratepayers:

More frequent revaluations

Business rate revaluations are being shifted from every five years to three years. The reform is driven to ensure property values better align with more current economic conditions and the relative burden of the tax is redistributed more often. The commitment to the shortening of revaluation periods means revaluations will take effect in 2026, 2029 and so on.

Increased compliance

The most significant change is on the matter of compliance. To support the move to more frequent revaluations, the Valuation Office Agency (VOA) requires an enhancement to the quantity and quality of data it uses for valuation purposes – and it will be incumbent upon the ratepayer to provide this information to the VOA through a new compliance framework. This will consist of two main administrative duties which are to be completed via an online portal:

1. Annual Confirmation Return – ratepayers will need to file an annual return within 60 days post 30 April each year to confirm the data the VOA holds on their property is correct, and;

2. Duty to Notify – ratepayers will have a duty to notify the VOA of any occupier or physical property and valuation changes and to provide rent, lease, and, where appropriate, trade and other information used for valuation purposes, within 60 days of changes being made.

The government aims to implement the new framework with a phased launch during the 2023 list, and it will begin fully once it is satisfied the online portal allows businesses to comply with the duties reasonably and effectively. At that point there will be significant fines when a ratepayer fails to comply or provides misleading information, and the provision of false information will be considered a criminal offence. It’s also worth noting the new reporting obligations will extend to the 700,000+ businesses that currently pay no business rates due to reliefs and to those who receive partial relief.

When a ratepayer is confirmed to have fully complied, the VOA has committed to disclose more information relating to the ratepayer's business rates valuation. Information will be made available to ratepayers and their advisors in advance of any appeals process on the 2026 rating list – with the draft rating list stage stated as present policy in this regard.

A swifter appeals system

Beginning at the 2026 rating list, the appeals process will be streamlined through the removal of ‘Check’ from the Check Challenge Appeal process. The current requirement to confirm or correct the facts at Check – before challenging a rateable value – will be deemed no longer necessary due to the fact the VOA should have accurate and timely property details in place as a result of the compliance regime.

The biggest difference to the appeals process, however, will be the introduction of a restrictive timescale in which ratepayers and their representatives can appeal. Whereas under current policy appeal action can be started at any point during a rating cycle, the 2026 List will introduce a six-month window to appeal. This will be curtailed even further to just three months from 2029 and onward.

In addition to more frequent revaluations and a new compliance regime, the legislation also introduces a number of other amendments to business rates:

• The scope of Material Change in Circumstance (MCC) appeals in England have been tightened so that legislation, licensing regimes and guidance from public bodies should not be grounds for a change in rateable value between revaluations. This is in direct response to the huge volumes of Covid-related MCC appeals the VOA received and clarifies that MCCs should relate to physical changes to a property or the surroundings only – effective immediately.

• The government intends to link annual increases to the business rates multiplier in line with the Consumer Prices Index (CPI) rather than the higher Retail Prices Index (RPI) – effective immediately.

• The requirement for the Transitional Relief scheme to be revenue neutral has been permanently removed, meaning upwards transitional relief is no longer funded by restricting falls in bills to raise revenue – effective immediately.

• The introduction of Improvement Relief – a 12-month grace period after a property has been improved, during which any increase in bills as a result of ‘qualifying improvements’ will not apply – effective 1 April 2024.

• The constraint on local authorities from awarding retrospective discretionary relief will be removed – at present any relief must be applied within 6 months of the end of the relevant rate year – effective 1 April 2024.

In all, these changes are intended to inject more fairness and accuracy into the business rates system, so that bills better reflect the property market and respond to economic changes more quickly, but will demand more diligence from ratepayers to ensure savings opportunities are maximized and to avoid significant potential penalties and fines for non-compliance.

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