Business Rates Reform Survey

At the Autumn Budget in October, the Chancellor announced, alongside a permanently lower rates multiplier for retail, hospitality, and leisure businesses, the government’s commitment to reforming the business rates system. Following this announcement, HM Treasury published proposed changes to the system – which can be found detailed below.

ABTA would welcome member feedback on these proposals to provide feedback to HM Treasury.

The government has outlined a plan to reform the business rates system, focusing on incentivising investment, ensuring fairness, tackling avoidance, increasing responsiveness, and modernising outdated structures.

The government says that a key aim is to remove barriers to investment. The consultation states that the current system discourages growth through thresholds and tax band "cliff edges," with businesses losing reliefs, such as Small Business Rates Relief when expanding. Reliefs like Improvement Relief, offering a year-long reprieve for property upgrades, are under review to determine their effectiveness.

Fairness is another noted priority, with the government noting that the reforms are aimed at ensuring all businesses pay their share based on accurate, up-to-date rateable values. To combat exploitation, the government is proposing a General Anti-Avoidance Rule (GAAR) to address abuses, including misuse of relief schemes.

Ministers say the system’s lack of responsiveness is also a concern. The consultations states that current delays between the Antecedent Valuation Date (AVD) and revaluations result in liabilities that fail to reflect economic realities. Shorter timelines and more frequent revaluations are being considered, though these changes must balance accuracy and cost. Phased annual data submissions, starting in 2026 and fully implemented by 2029, are essential for this transition.

HM Treasury also stresses that during economic downturns, the inflexible adjustment of tax rates to maintain government revenue can lead to inefficiencies. As such, the government is exploring linking tax bills directly to property values to better respond to changing market conditions.

Lastly, the government says modernisation is central to the reform agenda. It is noted that the Digitalising Business Rates (DBR) project, set for completion by 2028, will merge local authority property data with HMRC tax information. This integration aims to improve policymaking, streamline administration, and reduce avoidance, making the system more effective and equitable.

ABTA has selected the main elements of the consultation that we feel are relevant for members, and is seeking views on these below. However, members are also invited to share any other views on business rates that they may have, where these are not covered by the questions, to help inform ABTA’s position.