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Business rates - budget measures 2017

Last Modified November 15, 2017
 

Changes to business rates announced in the Spring 2017 Budget

 

 

The rateable values of all non-domestic properties are reassessed by the Valuation Office Agency (VOA) normally every five years. The 2017 Revaluation came into effect from 1 April 2017 and is based on rental values on 1 April 2015.

In the spring budget the Chancellor announced the following three measures to help reduce the impact of business rate increases from April 2017: 

Scheme 1: Supporting Small Businesses

Scheme 2: New Discretionary Relief Scheme

Scheme 3: New Business Rate Relief Scheme for Pubs

 

Information on the three schemes to date is as follows: 

Scheme 1: Supporting Small Businesses

Supporting small business rate relief has been introduced for businesses that face very large percentage increases in their rate bills due to the loss of small business rates relief. This measure only applies to a handful of accounts in the Borough and its effect is to limit any increase in rates to £600 for the 2017/18 billing year.

The Council has already identified ratepayers likely to qualify for the Scheme and recalculated and reissued new bills to them in September.

Scheme 2: New Discretionary Relief Scheme

The new discretionary relief scheme allows the Council to provide some support to ratepayers facing increases in their bills. 

A copy of the Hertsmere Revaluation Support Policy  (which was approved by Full Council on 27 September 2017) can be downloaded here.

In summary, the qualifying criteria is as follows:

Revaluation Support will be recommended if:

  1. The aggregate of all Rateable Value as at 1 April 2017 for all business owned locally or nationally by the ratepayer claiming Revaluation Support, is below £200,000.
  2. The ratepayer has experienced a financial increase, as a direct result of revaluation in the amount they have to pay for 2017-18, compared to their 2016-17 Hertsmere bill (after any other reliefs have been applied) in excess of 12.5%
  3. The relevant property was occupied on 1 April 2017. For those applicants who occupied during 2016-17 their part liability will be annualised before comparison with their 2017-18 liability to ensure they comply with the 12.5% increase requirement.
  4. The ratepayer is not already in receipt of Discretionary Rate Relief or of ‘Support for Small Businesses Relief’ (also announced in the spring budget) which limits increases on small properties caused by the loss of Small Business Rates Relief to £600.
  5. The award of relief complies with EU law on State Aid: Discretionary Relief qualifies as State Aid. so ratepayers will be asked to declare that their company or business has not received more than €200,000 in de minimis state aid in the last three years, and that granting relief under this scheme for this or any other property, whether within Hertsmere or not, will not cause this limit to be exceeded.

An application form process for 2017/18 will run from October until December, following approval of the Hertsmere Scheme by Full Council on 27 September. Hertsmere Revenues will write to ratepayers believed to be eligible, encouraging them to apply.

If you think you are eligible for Revaluation Support and do not receive an application form then you can download a Revaluation Support Application Form  here.

All completed application forms for 2017/18 must be received no later than 31 December 2017. At that point the value of the award to be made to each successful claimant can be calculated, since the total value of relevant business rate liability for those ratepayers, and the value of the Government’s grant allocation to Hertsmere for the financial year in question will both be known.

The award will be a percentage relief dividing the Discretionary Grant Relief total allocated to Hertsmere by the Department for Communities and Local Government by the sum of the financial increase that qualifying ratepayers have encountered in their 2017-18 bills, compared to their liability in 2016-17.

The total value of all awards of relief will be limited to the maximum financial allocation to Hertsmere Borough Council during any grant period. No applications can be accepted beyond the closing date within each financial year. 

Where awarded, Revaluation Support will be granted only to the end of the financial year. All qualifying applications will need to be renewed annually if relief is to continue into the next financial year to ensure there has been no change in circumstances and to assess that applicants are still eligible.

In all cases relief will end in the following circumstances (NB where eligibility ends during the financial year the relief will be pro rata to the last day of entitlement):

  • The end of the statutory period for which relief may be allowed;
  • The end of the financial year;
  • The property becoming unoccupied;
  • The ratepayer ceasing to be the person or organisation liable to pay non-domestic rates in respect of the property;
  • The commencement of a further award in respect of the property;
  • The council is unable to verify, following reasonable notice, that the area remains occupied;
  • A change in rateable value excludes the ratepayer from entitlement.

 

Please note that the total Gross Rates Payable for ratepayers within Hertsmere for 2017-18 is in excess of £53 million. The assistance the council is able to offer under the scheme will be limited to the funding provided, which is £221,000 for 2017-18.

Even if your application is successful, until you receive notification of your award, you should continue to pay your business rates bill in the meantime.

Scheme 3: New Business Rate Relief Scheme for Pubs

At the Spring Budget 2017, the Chancellor announced a £1,000 business rate discount for public houses with a rateable value of less than £100,000 for one year from 1 April 2017.

Eligibility criteria

The scheme is available to eligible occupied properties with a rateable value of less than £100,000. The majority of pubs are independently owned or managed and will not be part of chains. Where pubs are part of a chain, relief will only be available for each eligible property in the chain subject to meeting State Aid requirements (see the State Aid section at the foot of this guidance).

There is no definitive description of a traditional pub or public house in law which can be readily used by central government to advise local authorities in order to determine eligibility. The Government's objective has been to adopt an approach that makes the design and eligibility of the scheme easy to implement for local authorities in a clear and consistent way.

To this end, Hertsmere decided to utilise the property classification for 'Public House' (Analysis Code CL) and other similar categories used by the central government Valuation Office Agency - which determines property use and Rateable Value for business rate purposes nationally and locally - as the basis for identification of eligible properties within the Borough.

The 'Pub Relief Scheme - Hertsmere Borough Council Guidance' document - which was approved by Full Council at the meeting held 27th September 2017 - can be downloaded here.

The Government’s policy intention is that eligible pubs should:

  • be open to the general public
  • allow free entry other than when occasional entertainment is provided
  • allow drinking without requiring food to be consumed
  • permit drinks to be purchased at a bar.

 

For these purposes, it should exclude:

  • restaurants
  • cafes
  • nightclubs
  • hotels
  • snack bars
  • guesthouses
  • boarding houses
  • sporting venues
  • music venues
  • festival sites
  • theatres
  • museums
  • exhibition halls
  • cinemas
  • concert halls
  • casinos

 

The exclusions in the list above are not intended to be exhaustive and it is for Hertsmere as the local authority to determine those cases where eligibility is unclear.

How much relief will be available?

The total amount of Government-funded relief available for 2017/18 under this scheme is up to £1,000 for each eligible property. Relief is only available for properties with a rateable value of less than £100,000. Eligibility for the relief and the relief itself will be assessed and calculated on a daily basis.

If a property is eligible (or becomes eligible) for relief under other schemes – for example, Small Business Rates Relief, Charitable Relief, the Supporting Small Business Scheme, or the Discretionary Relief Scheme (Revaluation Support) that was also announced within the Spring Budget – relief will be awarded first under those schemes in the normal way. Only having initially awarded these reliefs would any Pub Relief be awarded.

How will the relief be awarded?

Properties identified as eligible for the Support for Pubs Relief will automatically be awarded the discount and ratepayers will receive a new business rates bill once this has been applied to their account.

Ratepayers who do not receive recalculated bills, and who believe they are eligible to receive the Pub Relief discount can download a Pub Relief Scheme Application Form here.

National or multi-national pub companies, chains or organisations will be requested to declare that their company or business has not received more than €200,000 in de minimis state aid in the last three years, and that granting relief under this scheme for this or any other property, whether within Hertsmere or not, will not cause this limit to be exceeded.

State Aid

State Aid law is the means by which the European Union regulates state funded support to businesses. Providing discretionary relief to ratepayers is likely to amount to State Aid. However the support for ratepayers will be State Aid compliant where it is provided in accordance with the de minimis regulations (EC 1407/2013)14.

The de minimis regulations allow an undertaking to receive up to €200,000 of ‘de minimis’ aid over a rolling three year period (consisting of the current financial year and the two previous financial years).

It is necessary for the local authority to establish that the awarding of aid will not result in the undertaking having received more than €200,000 of de minimis aid over a rolling three year period. Pubs are within the scope of State Aid law as companies within the hospitality sector can and do set up business in other Member States as they trade on a market. Linked enterprises are considered as one single undertaking for the application of the de minimis rule, therefore can receive €200,000 de minimis aid (including that outside of business rates relief) over three years.

If we believe you are eligible for the business rate discount for public houses, we will send you a new business rates bill once this has been applied to your account. You should continue to pay your business rates bill in the meantime.

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