Early response to government’s Interim Report on transforming business rates

There has been a cautious welcome to a government report, which addresses the concerns of retailers and business owners in the wake of the Autumn Budget 2024.

The ‘Transforming Business Rates: Interim Report’ includes what have been described as “apparently positive initiatives” aiming to benefit the retail sector and will be of special interest to small independent shops.

The report, published just this month, follows feedback following the Autumn Budget 2024 – which was described as a budget for shrinkage and not for growth by one Northern Irish business owner. The Interim Report has been described as providing an update on what the UK Government has learned since the 2024 Autumn Budget and what it will do next to meet its “objectives of delivering a fairer business rates system that supports investment”.

“The government will now engage with stakeholders on the reforms outlined to incentivise investment, so that we can remove barriers in the system and provide certainty and stability for ratepayers,” said Dan Tomlinson, Exchequer Secretary to the Treasury.

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“The Interim Report does not represent a set of policy recommendations. The Chancellor will provide a further update at Autumn Budget 2025, taking into account the 2026 revaluation outcomes, local government funding, and the economic and fiscal context.

“Any reforms taken forward will continue to recognise the importance of high streets as a vital source of essential services, a focal point for communities and the foundations of strong local economies,” he added.

Some of the detail outlined in the report includes measures changing the rates effect of opening a second property, changes to Transitional Relief, measures on Improvement relief when properties are enhanced as well as preparations for the merger of VOA and HMRC which could improve clarity of this currently very complex area of taxation.

The Federation of Independent Retailers (the Fed) issued a cautious welcome for the Interim Report but called for more consideration for the independent retail sector.

“Overall, the retail sector accounts for about 5% of the economy, but 20% of the Rates Bill and it is right that this area is subject to reform as our members face competition from online retailers based in out-of-town locations,” said National President Hetal Patel.

“Whilst the Fed welcomes the Chancellor and government’s focus in this area, we urge them to fully consider the importance of the retail sector – especially small independent shops, which are often at the heart of their communities and have rightly benefited from Rates Relief in the past.

“Many of our members had higher rates bills in April because of lost Retail, Hospitality and Leisure Relief in the last Budget and will await this year’s Budget and the Business Rates Revaluation – which will occur for the first time since 2023 – with concern.

“We are keen for the government to introduce new permanent retail, hospitality and leisure multipliers as low as possible from 2026, and to upwardly rate Small Business Rates for the very smallest businesses in line with inflation – but remain open to continued positive engagement in this area.”

You can read the Interim Report here: https://www.gov.uk/government/publications/transforming-business-rates-interim-report