Councils will be compensated for the impact of changes to business rates announced in today’s Budget, the Treasury has said.
The chancellor this afternoon announced he would bring forward the planned switch in annual business rates uplifts from the retail price index to the consumer price index by two years to 2018-19.
This is expected to benefit business by £240m next year, £530m in 2019-20 and a total of £2.3bn over the next five years. However, this will mean a reduction in cash available to councils under the 50% business rates retention funding system.
The switch was first announced in the 2016 Budget and was due to come in from April 2020.
Philip Hammond said he was bringing forward the change in response to concerns from business about the impact of high inflation.
The Budget book said: “Local government will be fully compensated for the loss of income as a result of these measures.”
The chancellor also announced that from 2022 business rates would be revalued every three years, rather than the current five years.
He said this would “reduce the size of changes in valuations”.
Both businesses and the Local Government Association have called for more frequent revaluations. There had been speculation in some quarters that the government was planning to introduce a system of self-assessment for business rates.
This did not emerge but papers published alongside the announcement said to enable this businesses would be required to provide regular information to the Valuation Office Agency, which is responsible for setting business rates.
A consultation on the changes will take place in spring.