Business rates bill

Non-domestic rates help fund local priorities

Business rates are an important source of revenue for local government – accounting for around a quarter of all council spending power and helping towards the Government’s levelling up ambition. 

Money raised is used to pay for vital local services, such as caring for older and disabled people, protecting children, fixing potholes and collecting bins.

It is imperative, however, that local government has a system that raises sufficient resources for local priorities in a way that is fair for residents and gives local politicians all the tools they need to be the leaders of their communities. 

For councils, it is also important that the tax system, including business rates, provides as much certainty as possible.

The LGA has been steadfast in its support for a sustainable local government finance system that conforms to principles of sufficiency, buoyancy, fairness, efficiency of collection, predictability, transparency and incentive. 

The Non-Domestic Rating Bill, currently making its way through Parliament, makes a number of technical alterations and changes to non-domestic (business) rates in England and Wales that will aid in enhancing some of those principles.

For instance, we have welcomed the Government legislating for a package of measures alongside revaluations once every three years, and support measures to improve valuation accuracy and timeliness – including new duties for ratepayers to notify the Valuation Office Agency of information on the calculation of their rateable value.  

We have also supported reforms to ‘material changes of circumstances’ because of the COVID-19 pandemic, and support the changes in the Bill that will mean material changes of circumstances should relate to physical changes only.

Significantly, the LGA is also in favour of the Government’s promise to consult on business rates avoidance and evasion. 

We have suggested that this could include a review of exemptions (such as where businesses happen to be located on farms), and further clampdowns on business rates avoidance along the lines of those introduced in Wales and Scotland. This would ensure that the rules on reliefs, such as empty property and charitable relief, are applied fairly. 

We will continue to support more fundamental changes to business rates.

We have been pleased to see our recommendations repeated by MPs and Peers in debates on the Bill in Parliament – including giving councils more flexibility on business rates reliefs, giving councils the ability to set their own business rates multiplier, and consideration of alternative forms of income for local government.

With this area being so complex, we are also encouraging the Government to bring forward changes in the basis of liability so that more is defined in statute. 

How this is framed should be the subject of a further consultation involving the LGA and councils, as many fundamental concepts such as ‘beneficial occupation’ have been set by case law. This has led to results that may seem puzzling to the public, such as the fact that large, vacant sites may not pay business rates.


Sector support 

Avoid, shift, improve