Jeremy Hunt delivered the Spring Budget to Parliament yesterday (6th March 2024) with many interruptions from the opposition in a lively address. It was predicted that the Chancellor of the Exchequer would aim to make some vote-pleasing announcements ahead of the next general election, and most of the predictions were correct.
We will see a further cut of two per cent on national insurance in a repeat of his autumn statement. We will also see the freeze on alcohol duty continue for another 12 months, the tax status of “nom-doms” will be abolished with new measures being brought in, and he promises to fully invest in the upgrades needed to modernise the NHS.
There was also substantial talk of promoting UK investment with Jeremy Hunt saying that the UK “was on track to be the World’s next Silicon Valley”. This would include a new British ISA and better pension opportunities with more return on investment.
The VAT threshold will increase to £90k from the 1st of April; this is the first VAT increase in seven years and would lift tens of thousands of businesses out of paying VAT. As well as this Hunt announced that he will be helping small businesses by providing £200m of funding to extend the Recovery Loan Scheme as it transitions to the Growth Guarantee Scheme.
But what does this mean in the World of business rates? Bigger picture, not much has changed!
The Empty Property Relief “reset period” will be extended from six weeks to 13 weeks from April 1st in England. We were wondering if the Government might go further and replicate the Welsh changes and increase the reset period to 26 weeks. Even the increase to 13 weeks is further bad news for landlords of empty commercial properties. In reality, properties are vacant because finding tenants takes time rather than out of choice, so we suspect it’ll have little impact on the motivation of landlords to minimise their exposure to empty property rates.
The Government also announced a consultation on a “General Anti-Avoidance Rule” for business rates in England and has committed to improved communication for ratepayers to help with unregulated business rates agents. We of course welcome any change to improve our industry but wait to see what this will be, and suspect the devil might well be in the detail here!
Good news for the UK’s “world-leading creative industries” as it was announced there would be over £1 billion in new tax reliefs, including a 40% relief from business rates for eligible film studios in England for the next 10 years and a permanent extension will be made for tax reliefs for theatres, orchestras, museums and galleries.
From April 2025, the Government will abolish the Furnished Holiday Lettings tax regime in a bid to create more long-term lets in coastal locations. This comes as another pressure on holiday let owners who have already seen many changes to regulations.
To qualify for the regime a property must be available for at least 210 days a year and let out for at least 105 days. The advantage of this regime over buy-to-let is that landlords can deduct the full cost of their mortgage interest from the income they make. It will be individuals who are making minimal profit from their holiday let who will see the most impact here, so it will be important to ensure that their property is registered to pay business rates and not council tax- which is set to double for second homes in some areas (and even further in Wales).
The alcohol duty freeze has been extended until February 2025 on top of the 75% reduction in business rates for the hospitality industry. However, many publicans think this is not enough, especially as many of their bills will increase by 6.7% in April due to their properties having a rateable vale of £51,000 and above and the standard multiplier being increased from 51.2p to 54.6p.
If you feel affected by any issues relating to business rates from this Budget and would like to speak to someone then please get in touch.