While the focus of the Chancellor’s autumn statement was on taxes, new business rates from April 2023 were largely overlooked. The reality is there will be winners and losers!
For some business owners, the decision to use new rateable values from next April is welcome as their rates fall. Others, however, face an increase in business rates.
Business rates are calculated by the Valuation Office Agency, so there are always regional variations. For example, businesses in the North East are more likely to work from properties with a lower value than those in the South East.
The current rates were last updated in 2017 and based on valuations in 2015. As a result, many commercial property values have dipped – particularly on the high street. But some property values have increased. While rents have fallen in many high streets, others have risen, particularly in local shopping parades and holiday hotspots.
So checking your new rates is essential so you are prepared in advance. But, who are the winners and losers?
New business rates from April 2023
Winners
On the whole, the business rates bills of larger retailers on high streets are reducing from April 2023. Department stores, such as Selfridges, will see bills reduce by millions. Other high street shops, amusement arcades, sales kiosks and retail warehouses will also be seeing bills fall. These decreases reflect the change in rateable values from 2017 to 2023.
Losers
Those facing an increase in business rates include farm shops, convenience stores and takeaway food outlets. Large manufacturers will also see a rise in rates as will pharmacies that are near or within surgeries or health centres.
This table outlines just some of the winners and losers when new business rates are implemented in April 2023.
| Special Category (SCat) description | Property Numbers in UK | 2017 Rateable Value (£) | 2023 Rateable Value (£) | Change (£) | Change (%) |
| Large Shops (Over 1850 m2) | 2,180 | 1,247,433 | 814,368 | -433,065 | -34.7 |
| Large Shops (750-1850 m2) | 470 | 78,112 | 63,010 | -15,102 | -19.3 |
| Hypermarkets/Superstores (Over 2500 m2) | 2,200 | 2,858,811 | 2,431,783 | -427,028 | -14.9 |
| Factory Shops | 1,960 | 176,920 | 157,314 | -19,606 | -11.1 |
| Retail Warehouses And Foodstores | 9,800 | 2,008,811 | 1,821,973 | -186,838 | -9.3 |
| Shops | 423,690 | 8,060,613 | 7,387,370 | -673,243 | -8.4 |
| Amusement Arcades | 750 | 26,150 | 24,233 | -1,916 | -7.3 |
| Salons/Clinics Within/Part Of Specialist Property | 100 | 865 | 812 | -52 | -6.0 |
| Shops Within/Part Of Specialist Property | 1,980 | 32,716 | 31,320 | -1,396 | -4.3 |
| Sales Kiosks | 5,450 | 68,256 | 67,190 | -1,066 | -1.6 |
| Betting Offices | 4,120 | 71,247 | 72,181 | 934 | 1.3 |
| Markets (Other Than Livestock) | 710 | 23,474 | 23,824 | 350 | 1.5 |
| Airport Stores | 340 | 136,439 | 139,519 | 3,080 | 2.3 |
| Pharmacies | 1,480 | 23,078 | 23,633 | 555 | 2.4 |
| Post Offices | 2,160 | 32,087 | 33,406 | 1,319 | 4.1 |
| Hairdressing/Beauty Salons | 23,350 | 153,449 | 163,068 | 9,619 | 6.3 |
| Showrooms | 8,230 | 227,765 | 242,740 | 14,975 | 6.6 |
| Kiosks Within/Part Of Specialist Property | 690 | 8,610 | 9,235 | 625 | 7.3 |
| Takeaway Food Outlet (Predominantly Off Premises) | 5,000 | 41,940 | 45,103 | 3,163 | 7.5 |
| Large Food Stores (750-2500 m2) | 2,950 | 651,013 | 705,502 | 54,489 | 8.4 |
| Farm Shops | 1,600 | 14,945 | 16,605 | 1,660 | 11.1 |
| Convenience Store | 7,250 | 257,547 | 290,306 | 32,759 | 12.7 |
| Pharmacies Within/Adjacent To Surgery/Health Centre | 1,850 | 50,642 | 57,688 | 7,046 | 13.9 |
How business rates are calculated
Business rates are calculated by multiplying the rateable value of the business premises by the multiplier, currently 0.5%. The government says this will be frozen, keeping the small business multiplier and standard multiplier at 49.9p and 51.2p respectively before applying any eligible reliefs.
Our advice
As with any change to any business income or expenditure, staying ahead is advisable. Are you saving enough to pay the increases? If you’re expecting a decrease in your business rates bill, how will you use the increase in cash flow?
Chances are they might be eaten up by increases in other costs. But if you can put money aside, then it’s worth doing so for the future as other bills rise.
If you would like to talk to our team about your cash flow and budgeting, contact us today.