UK Government Issues £33m Tax Discount Correction for High Street Businesses Following Budget
The government updates business property tax discounts, providing £33m extra relief for retail and hospitality firms to account for rising inflation rates.
POLICY WIRE — London, UK — The government has issued a revision to property tax discounts for businesses across the UK just days after sharing details with local authorities.
A correction issued last weekend means that high street establishments will benefit from an additional £33 million in discounts compared to what originally communicated to councils.
The initial guidance provided to councils in England failed to account for inflationary pressures, necessitating the recent adjustment.
Originally, retail, hospitality and leisure firms were slated to receive a 5p reduction in the multiplier used to calculate tax liabilities. However, officials realized the value of this discount would be eroded by the 3.5% inflation rate recorded in September.
In response, the government introduced new directives stating the national multiplier will rise from 5p to 5.2p next April to ensure the discount remains proportionate to actual tax bills.
Under the revised figures, the small business RHL multiplier has been adjusted from 39.7p to 39.5p, while the standard RHL multiplier drops from 44.7p to 44.5p.
While officials informed council staff that these changes ensure inflation adjustments are applied consistently in line with policy goals, they did not specify if the initial figures resulted from a calculation error or a simple omission.
The Department for Housing, Communities and Local Government has been approached for a statement regarding the matter.
Alex Probyn, practice leader for property tax in Europe and Asia-Pacific at Ryan, noted that the correction is welcome.
Probyn stated that increasing the discount protects its value against inflation and is positive news for the retail, hospitality, and leisure sectors.
However, he also emphasized that stability and certainty depend on getting published tax rates correct, noting that businesses and advisors began planning based on Budget figures only for them to change within days.
He added that the interaction between inflation and a fixed discount was entirely foreseeable and businesses should have received the correct data on Budget Day.
Reporting by Policy-Wire (PW)
