The Great Business Rates Shake-Up: What the Latest Budget Means for Your Business

Hello, savvy business owners and financial navigators!

Another budget, another raft of changes to digest. This time, the Chancellor had quite a bit to say about Business Rates – that often-dreaded tax on non-domestic property that can feel like a silent killer of cash flow. But fear not, because amidst the usual complexities, there’s some much-needed relief on the table, especially for our beloved hospitality sector.

Let’s break down what this latest shake-up means for you, focusing on the specific reliefs and the broader corporate tax landscape.

The Revaluation and the Freeze: A Mixed Bag

First, a quick recap: Business Rates are tied to the rateable value of your property, which is periodically reassessed. We’ve just had a revaluation come into effect on 1 April 2023, based on property values as of 1 April 2021.

The good news? The government has heard the cries of businesses facing increased bills.

Key Announcements on Business Rates

1. Freeze on the Multiplier: The most significant relief for all businesses is the freeze to the business rates multipliers for 2024-25. This means the amount you pay per pound of rateable value won’t increase, saving businesses an estimated £1.5 billion over the next five years. This is a big win, as an increase would have been tied to September’s inflation figure (which was still pretty high!).

   • Check the current multipliers here: HMRC Business Rates Guidance

2. Transitional Relief: For those seeing a significant increase in their rateable value following the 2023 revaluation, transitional relief continues. This caps how much your bill can go up each year, phasing in the new rates gradually. It’s designed to prevent sudden, crippling jumps in costs.

Spotlight on Hospitality: A Welcome 75% Discount!

This is where the budget really shines for pubs, restaurants, cafes, and other leisure businesses.

Retail, Hospitality and Leisure (RHL) Business Rates Relief

• Discount Extended: The 75% relief for eligible retail, hospitality, and leisure properties has been extended for 2024-25. This means businesses in these sectors will receive a 75% discount on their business rates bill, up to a maximum of £110,000 per business.

Real World Scenario: “The Cosy Pint” Pub

Imagine “The Cosy Pint,” a beloved local pub with a rateable value of £100,000.

• Without Relief: They’d be looking at a substantial bill (e.g., £50,000 using a 0.50p multiplier).

• With 75% RHL Relief: Their bill is slashed by 75%, meaning they only pay on £25,000 of their rateable value (max £110k cap is well above this). This is a game-changer for their bottom line, potentially freeing up tens of thousands of pounds for investment, staff wages, or simply staying afloat.

This relief is crucial for sectors still recovering from recent economic challenges and high energy costs. It acknowledges their vital role in local communities and the economy.

Broader Corporate Tax Pressures: What Else is Brewing?

While business rates saw some relief, the broader corporate tax landscape continues to evolve, keeping businesses on their toes.

1. Corporation Tax Rate: Remember the jump? From 1 April 2023, the main rate of Corporation Tax increased to 25% for companies with profits over £250,000. Companies with profits of £50,000 or less continue to pay 19%, with a tapered rate in between. This means larger, more profitable businesses are facing a significantly higher tax burden.

   • More info: Corporation Tax rates

2. Full Expensing: The good news here is that full expensing has been made permanent. This allows companies to deduct 100% of the cost of qualifying plant and machinery investments from their profits in the year of purchase. For every pound a company invests, their taxable profits are immediately reduced by a pound. This is a powerful incentive for businesses to invest and grow.

   • Details on Full Expensing: Capital allowances: Full expensing

3. R&D Tax Credits: The R&D tax credit schemes have also seen changes, with a merging of the SME and RDEC schemes for accounting periods beginning on or after 1 April 2024. It’s crucial for innovative businesses to understand these changes to maximize their claims.

Conclusion: Plan, Adapt, and Thrive

The latest budget brings a mixed bag: crucial relief for business rates, especially for hospitality, but continued vigilance needed on corporate tax.

My Advice as Your CA:

• Review Your Business Rates Bill: Ensure you are getting the RHL relief if you are eligible. If your rateable value has significantly increased, understand your transitional relief.

• Embrace Full Expensing: If you’re planning investments in plant and machinery, factor in the immediate tax relief from full expensing.

• Stay Informed on Corporation Tax: Understand which rate applies to your business and plan your profit extraction accordingly.

This isn’t just about compliance; it’s about optimizing your financial strategy. Don’t let these changes catch you off guard. Let’s work together to make sure your business doesn’t just survive but thrives in this ever-evolving tax landscape.