The Valuation Office Agency (VOA) has updated the rateable values of all businesses, and other non-domestic, properties in England and Wales from 1 April 2023.

The Government levies the charge on offices, shops, pubs, and warehouses. In fact, most non-domestic properties will attract business rates. They may also be charged where only part of a building is used for non-domestic purposes.

A Government business rates support package has been put in place worth around £13.6 billion over the next five years.

It includes measures to freeze the business rates multipliers at 49.9p and 51.2p in 2023-24, which, it is claimed, will see bills six per cent lower than they would have been without the freeze.

Changes to business rates in 2023:

• The multiplier represents the number of pence in each pound of the rateable value that will be payable in business rates before any relief or discounts are applied.
• A transitional relief scheme will cap bill increases caused by changes in rateable values at the 2023 revaluation.
• For retail, hospitality, and leisure business rates relief will be increased from 50 per cent to 75 per cent (up to £110,000 per business) in 2023-24.
• The increases are capped at £600 per year from April 2023 if businesses lose their eligibility for small business rates relief as a result of the revaluation.

The updated values reflect the property market as of 1 April 2021 and, while some sectors benefit, others have been hit hard by the Business Rates Revaluation 2023.

How are business rates calculated?

They will be based on the property’s ‘rateable value’, the estimated value on the open market.

The rateable value for your property is not what you pay in business rates or rent. Your council uses the rateable value to calculate your business rates bill.

What is the Small Business Rates Relief?

This applies if the property has a rateable value of less than £15,000, and generally if the business only uses one property:

• Full relief is available on properties with a rateable value of £12,000 or less
• For those between £12,001 and £15,000, relief goes down gradually from 100 per cent to zero per cent

If you’re a small business but you don’t qualify for small business rate relief, your bill will still be worked out using the lower small business multiplier (for properties with a rateable value below £15,000).

Need help with understanding business rates? Contact us today.

The Government has announced a shake-up in how Benefits in Kind (BIK) are paid. The move will allow tax agents to run payroll BIK on behalf of clients for the first time.

The Government says it will help to reduce administrative burdens on employers and enable agents to support their clients more effectively.

If an employer provides a taxable benefit, such as the use of a company car, the taxable benefit has to be valued. For most types of BIK, the law sets out how to work out the value, with tax paid on the taxable value of the benefit.

Report expenses

It is currently the duty of employers to report taxable expenses or benefits for employees to HM Revenue & Customers (HMRC) directly through payroll or at the end of the tax year. They are also required to report how much Class 1A National Insurance (NI) is owed on all the expenses and benefits provided and pay any outstanding NI.

The Chancellor announced in the March Budget a move to simplify the tax system for taxpayers and their agents, and will deliver IT systems to enable tax agents to payroll BIKs on behalf of employers.

Agents will be able to report expenses related to company cars, health insurance, travel and entertainment, and childcare.

Digital reporting

HMRC has already confirmed that it will require the minority of digitally capable employers who still submit forms reporting employee benefits and expenses on paper, to use online forms from April 2023.

It will then move to issuing P6 and P9 coding notices solely using digital methods.

Expenses and benefits for each employee do not have to be reported at the end of the tax year if all expenses and benefits are payrolled.

There are penalties for non-compliance if employers carelessly or deliberately give inaccurate information in a tax return that results in not paying enough tax or over-claiming tax reliefs.

Need advice on Benefits in Kind payments and other taxation matters? Contact us.

Just a few days short of the third anniversary of the first Covid lockdown, Chancellor Jeremy Hunt rose to the Despatch Box to deliver the first full Budget to have taken place in 504 days and the first unaffected by the immediate impact of the pandemic since October 2018.

Of course, in that time, we have had several fiscal statements and mini-Budgets, but never a full Budget Statement.

In contrast to the last full Budget, gone is the financial emergency of the Covid lockdowns, gone is the immediate fallout from the ill-fated Truss-Kwarteng mini-Budget of last Autumn, and gone is the immediate threat of a winter with households and businesses crippled by astronomical fuel bills.

Against a background of Brexit, Covid and domestic political instability, Jeremy Hunt will doubtless have been hoping that the first full Budget post-Covid would mark a return to a more normal footing for politics and the economy.

However, there was still plenty for the Chancellor to deal with. Inflation, exceptionally high fuel bills, stagnant growth, economic inactivity and the post-Covid damage to the public finances have not gone away.

Those were the areas the Chancellor was expected to set his sights on as he rose to his feet.

• OBR Forecasts and the Public Finances
• “Back to Work” Measures
• Cost of Living, Childcare and Fuel Bills
• Business Taxation
• Pensions
• Conclusion

OBR Forecasts and the Public Finances

The Chancellor began by describing his speech as a “Budget for Growth”, saying he would deliver on an aim to make the UK one of the most prosperous countries in the world by removing barriers to investment, tackling labour shortages, breaking down barriers to work and harnessing British ingenuity.

He said the Office for Budget Responsibility (OBR) expects inflation to fall from a high of 10.7 per cent in the final quarter of 2022 to 2.9 per cent by the end of 2023, achieving the Government’s aim of halving inflation.

The OBR no longer expects the economy to enter a technical recession, with the economy expected to shrink by 0.2 per cent during 2023, before growing by 1.8 per cent in 2024, 2.5 per cent in 2025, 2.1 per cent in 2026 and 1.9 per cent in 2027.

Moving to the public finances, the Chancellor said that public sector net debt is currently 100.6 per cent of GDP but is expected to fall to 94.6 per cent of GDP by 2027-28.

“Back to Work” Measures

The Chancellor said that there are currently one million vacancies in the economy and seven million adults of working age who are not currently employed. He said that encouraging more people from this group into the labour market would be vital for growing the economy.

He announced various measures designed to get people back to work, including reforms to disability and out-of-work benefits intended to remove certain constraints and disincentives to work.

He also noted that there are now three million working age people over the age of 50 who are not in work – a figure that has increased by more than 300,000 since the pandemic. To tackle this, he announced further career support for the over-50s and a dedicated program of apprenticeships to be known as “Returnerships”.

Meanwhile, the Chancellor said that five occupations in the construction sector will be added to the Shortage Occupation List, making it easier for employers to employ skilled workers from outside the UK.

Cost of Living, Childcare and Fuel Bills

Following an announcement earlier in the day, the Chancellor confirmed that the Government’s Energy Price Guarantee, which caps per-unit household energy bills, will remain in place for a further three months from April to June 2023.

The Chancellor said that this effectively continues to cap a typical household bill at £2,500 a year.

At the same time, he said that fuel duty will remain frozen and the existing temporary 5p cut will be retained for an additional year.

He also confirmed another significant measure that had been announced ahead of the Budget in the form of a commitment to extend the provision for 30 hours’ free childcare for the children of working parents to the parents of all pre-school children aged from nine months. These reforms will be phased in gradually from April 2024 to September 2025.

There will also be changes to staff-to-child ratios in nurseries and incentives for new childminders to encourage an increase in provision in the sector.

Business Taxation

The Chancellor announced two significant changes for businesses – the introduction of a new “Full Expensing” scheme to help mitigate the impact of April’s increase in the main rate of Corporation Tax, which he confirmed will go ahead, and further reforms to Research and Development (R&D) Tax Relief.

Full Expensing will be introduced from 1 April 2023, replacing the Super Deduction. It will allow companies to write off the full cost of qualifying plant and machinery investments in the year of the investment. The measure initially applies for three years but the Chancellor said he hoped to make it permanent “when fiscal conditions allow”.

The Chancellor announced a significant increase in the relief available to loss-making R&D intensive SMEs, which will now receive £27 from HM Revenue & Customs (HMRC) for every £100 of R&D investment.

The move has been prompted by reforms previously announced that will take effect from April 2023 that will reduce the rate of tax relief and tax credits available to some SMEs.

Additionally, the Chancellor announced the creation of 12 investment zones across the UK. Those in England will have access to funds worth £80 million over five years, with a five year tax offer equivalent to that available to Freeports.

The zones will be located in the East Midlands, Manchester, Liverpool, the North East, South Yorkshire, Tees Valley, the West Midlands and West Yorkshire, as well as in each of Wales, Scotland and Northern Ireland.

Pensions

Few Budgets come to pass without some sort of rabbit-out-of-the-hat moment and this one was no exception.

While it had been trailed that there would be a significant increase in the Pensions Lifetime Allowance from its current level of £1 million, in a surprise move the Chancellor announced that the Pensions Lifetime Allowance would be scrapped entirely from April 2023.

At the same time, he also increased the Pensions Annual Allowance from its current level of £40,000 up to £60,000 from April 2023.

Conclusion

This was in many ways a return to normality for a Budget following the upheavals of recent years.

Reforms to Pension Allowances in particular may mean that business owners and senior professionals will need to revisit their tax planning to take advantage of the increased ability to save into their pension pots.

Link: Spring Budget 2023

Landlords and potential investors need to be aware of imminent changes to energy efficiency standards for properties, which can attract hefty fines if not adhered to.

Changes to Minimum Energy Efficiency Standards (MEES) and Energy Performance Certificate (EPC) requirements, come into force on 1 April.

At the moment, for commercial properties, a tenancy cannot be granted to new or existing tenants if the property has an EPC rating of F or G, unless the property is registered on the Private Rented Sector (PRS) Exemptions Register.

But from 1 April, it will be an offence to continue to let or rent out a property if it does not have a rating of at least E, which will attract a fine.

Some exemptions

Fines range from 10 per cent of the rateable value for breaches of less than three months (minimum £5,000 to a maximum of £50,000) to 20 per cent of the rateable value for breaches over three months (minimum £10,000 to a maximum of £150,000). Additionally, the breach may be made public through entry in the PRS Exemptions Register.

Some exemptions may apply to the minimum E rating requirement, including a seven-year payback test, third-party consent, devaluation, and recently becoming a landlord.

Residential properties

Residential properties should already have the required E rating, but Government proposals mean that by 2025 they must be upgraded to a C rating or higher for any new lettings, and in 2028 it will also apply to any continuing tenancies.

All of this means landlords should start preparing to make sure their properties are up to the required standard by the time of the deadlines.

Not only is there the threat of penalties for non-compliance, but they must consider the costs of upgrading properties and the consequent loss of rental income if they are not up to standard.

Property owners will therefore need to be able to show that the property has an appropriate minimum EPC rating of E in place and that all the relevant energy improvements that can be made have been completed.

For help and advice on related matters, contact us today.

Company car drivers will see changes to the amount they can claim back for fuel costs from their employer from 1 March.

HM Revenue & Customs (HMRC) has also confirmed that the way the advisory electricity rate (AER) is calculated has been changed to better reflect energy prices, particularly with soaring electricity costs, when it is reviewed quarterly.

Previously it has been based solely on an annual figure published by the Department for Business, Energy & Industrial Strategy (BEIS), and the electrical energy consumption values for each car model, provided by the Department for Transport (DfT).

Quarterly index

HMRC will continue to use the BEIS and DfT data but will now also incorporate figures published in the Office for National Statistics (ONS) quarterly index for domestic electricity.

The new rates include a 1 pence per mile (ppm) increase in the advisory electricity rate (AER) used to reimburse drivers of electric company cars.

In contrast, and to reflect falling fuel prices, petrol, diesel and LPG advisory fuel rates (AFRs) have been reduced from 1 March.

Rates cut for petrol and diesel

The rates for petrol company cars have all been cut, with the AFR for petrol vehicles up to 1,400cc now 13 ppm.

Vehicles powered by 1,401-2,000cc engines see a decrease of 2 ppm, to 15 ppm. For engines larger than 2,000cc the AFR sees the biggest reduction of 3 ppm, to 23 ppm.

For diesel, cars up to 1,600cc there is a reduction of 1 ppm, to 13 ppm, and engines from 1,601-2,000cc see a reduction of 2 ppm to 15 ppm. The 2,000cc rate is cut by 2 ppm to 20 ppm.

For LPG vehicles up to 1,400cc, the rate remains the same at 10 ppm but has been cut by 1ppm to 11ppm for vehicles with an engine size of 1,401-2,000cc. For engines greater than 2,000cc, there is also a reduction of 1 ppm to 17 ppm.

Hybrid cars are treated as either petrol or diesel cars for AFR purposes.