The Government has revised business rates discounts for retail, hospitality and leisure firms in England, meaning high street businesses will receive £33 million more in discounts than councils were initially led to believe. The correction was issued last weekend, just days after the original details had been distributed to councils.
The original guidance sent to councils in England had failed to account for inflation and consequently required adjustment. Retail, hospitality and leisure firms were initially set to benefit from a 5p discount in the multiplier used for tax calculations, but the discount was at risk of being undermined by inflation, with bills due to be uprated in line with the 3.5% inflation rate recorded in September.
Revised multipliers and discount
In response, officials swiftly issued revised guidance stating that the national multiplier will rise from 5p to 5.2p next April in order to remain proportionate to tax bills. The small business RHL (retail, hospitality and leisure) multiplier was revised from 39.7p to 39.5p, while the standard RHL multiplier falls from 44.7p to 44.5p.
The Government informed council officials that the revision ensures inflation adjustments are now applied consistently and reflects its policy intention, though it stopped short of clarifying whether the original figures were the result of a calculation error or an omission. The Department for Housing, Communities and Local Government has been approached for comment.
Industry reaction
Alex Probyn, practice leader, property tax, Europe and Asia-Pacific at global tax firm Ryan, said "the correction is welcome". "Increasing the discount protects its value against inflation and is good news for retail, hospitality and leisure businesses," he said. "But stability and certainty start with getting the published tax rates right. Businesses and advisers began planning around the figures issued on Budget Day, only for those rates to change within days. The interaction between inflation and a fixed discount was entirely foreseeable. Businesses should have been given the correct figures on Budget Day."
