The rates relief offered as support following the pandemic will soon end, October’s Budget outlined a new relief for eligible retail, hospitality and leisure properties with up to 50% relief on rates bills for eligible businesses. Multipliers have been frozen and there is an extension to the current Transitional Relief and Supporting Small Business schemes.
It is important to note that the scope for retail will return to the scope of the discount offered pre-pandemic and local authorities will be expected to use their discretionary relief powers to grant the discount in line with the relevant eligibility criteria. Local authorities will be compensated for the implementation with New Burdens funding provision to cover staffing, IT costs and so on.
The final Review of Business Rates was also published at the Budget. Changes include
- More frequent revaluations, moving to a three yearly cycle starting from the next revaluation in 2023, with the following revaluation in 2026
- New changes to support delivery of the more frequent revaluations, including new duties on ratepayers to provide the VOA with information
- A new relief to support investments in property improvements
- New exemption and relief to support green technologies
There is a technical consultation to follow intended to support these changes, frequent criticism of business rates is that they unfairly tax businesses that use property intensively, meaning those businesses reliant on property carrier a higher tax burden than one with high turnover and the ability to produce profit in a small space.
What does this mean for the aftermarket?
Automotive aftermarket businesses frequently challenge the scope offered from central government for interpretation through the chain of devolved administration and local government. This can cause a cost disparity at local level, especially for those operating close to borders will sharply feel an unfair advantage of competitors with less taxation than themselves. Additionally, businesses that are subject to the application of rates will incur them at the quietest time of year, thanks to the legacy of the MOT extension.
To support the government ambition of vehicle electrification, clarity regarding the application of this tax is desperately needed to ensure a fair system of taxation and to prompt confidence for the sector to invest in the equipment and training required to upskill the existing workforce to maintain and repair high voltage vehicles. If current uptake remains, the sector will be short some 36000 high voltage technicians by 2030.
Rising costs to the automotive aftermarket translate very quickly into a lack of affordable private transport solutions. This would be highly detrimental to the relief offered to high street, leisure, and hospitality if the small businesses and their consumers had to rely on public transport as we climb out of a pandemic.
What can a small business do within the aftermarket?
- Apply for rates relief if you feel you are eligible, bookmark the relevant pages on your local government website and check for changes regularly.
- Membership of lobbying groups such as the IAAF and the FSB can help campaign for a level playing field. It is important to note that these organizations still operate on behalf of all business, regardless of membership, and there is plenty of free information to access even if you choose not to support with membership.
- Treat businesses that offer to claim relief on your behalf with extreme caution, they can cause more trouble than the problems they claim to solve.
- If you have a good accountant, ask their advice regarding your tax position. Their expertise may be a billable extra, or included in a package of benefits you already have.
- You may get a temporary reduction in your business rates if your premises are affected by severe local disruption (like flooding, building or road works)
Business Rates (or “non-domestic rates”) is the term used to describe the tax applied to all non-domestic properties. They are devolved to Northern Ireland, Scotland, and Wales. This blog post is not a live document, meaning up to date information can be found at gov.uk, devolved government, and local authority websites. The government is in the unenviable position of bringing the financial burden of the pandemic under control, the latest government commitments regarding business rates total £7billion of support over the next five years.
Since Hayley’s last meeting regarding the position of the automotive aftermarket with the Chief Secretary to the Treasury, Simon Clarke MP, she has accepted a position with the FSB as Automotive Policy Chair and continues to campaign for greater support for the sector.