BBPA briefing
BBPA briefing
Business Rates and Budget 2016 Introduction The BBPA has led calls for reform of businesses rates, given the burden they place on pubs. Changes announced in the Budget will result in significant savings for the sector, and particularly for small community pubs.
Changes in the Budget The business rates bill for any pub will continue to be derived from a combination of the rateable value (RV), the business rate multiplier and any applicable relief. From April 2017, there will be changes to the structure of the rates system and the reliefs. The multiplier is the rate at which the business rates bill is set, set in pence per pound of the rateable value. In England there are effectively two multipliers, one for small businesses and one for larger ones. The 2016 Budget announced changes to the thresholds at which these are set. The major change is that the threshold at which the small business multiplier is set has increased from £18,000 (£25,500 in London) to £51,000, significantly benefiting pubs. Pre-April 2017
Post-April 2017
Small business
Below £18,000 in most of Below £51,000 England, but below £25,500 in London
Large business
Above £18,000 in most of Above £51,000 England, but above £25,500 in London
There are currently 20,212 pubs that pay the small business multiplier but this will increase to 33,841, an increase from 49% to 81% of English pubs. For 2016 the reduced rate is worth 1.3 pence in the pound.
Small business
Pre-April 2017
Post-April 2017
20,212 (49%)
33,841 (81%)
British Beer & Pub Association, Brewers’ Hall, Aldermanbury Square, London, EC2V 7HR. 020 7627 9199
Small Business Rate Relief The other fundamental change announced in the Budget was to Small Business Rate Relief (SBRR). Currently this allows 100% relief to all properties with an RV of £6,000 and below. This then tapers to zero at £12,000. This was a rolling one-year extension of a statutory scheme that only allowed relief up to £6,000. SBRR is only applicable to businesses where the sum of their Rateable Values is below the threshold and only one property is assessed at an RV of over £2,600. For this reason, and because they tend to be larger, the vast majority of managed pubs will not receive this discount. In Budget 2016 it was announced that SBRR will be extended permanently to allow 100% relief to all properties with an RV of £12,000 or less and a taper from £12,000 to £15,000. RV
Current
Future
Pubs affected
% of total
0-6,000
Received 100% relief
Will receive 100% relief
3,609
9
6,000-12,000
Tapers from 100% to 0% Will receive 100% relief
12,684
31
12,000-15,000
No relief
Tapered relief 100% to 0%
from 3,683
9
Total impact for pubs The impact of these two changes is a more favourable business rates regime for pubs. The analysis below shows the impact of the changes, based on the difference if the measures were introduced in 2016/17. It therefore uses rates and reliefs applicable in this period. It should be noted that the measures do not take effect until April 2017, at which point all rateable values are likely to have changed as a result of the ongoing revaluation. In total, the measures are predicted to create a saving of over £39 million for English pubs, with 81 per cent of pubs benefiting from either a small business multiplier or Small Business Rate Relief, or both. Over 16,000 pubs will pay no business rates at all, 40 per cent of the total. Some pubs will not see a reduction in their bills as they currently pay zero, or are not receiving additional SBRR, and already receive the lower multiplier rate (pubs with an RV of £15-18k in most of England and pubs with an RV of £15k-£25.5k in London).
British Beer & Pub Association, Brewers’ Hall, Aldermanbury Square, London, EC2V 7HR. 020 7627 919999
RV
Pubs affected
% of total
Saving
0-6,000
3,609
9
£0
6,000-12,000
12,684
31
£21,071,255
12,000-15,000
3,683
9
£12,677,704
15,000-51,000
17,474
42
£5,342,179
Total
33,841
81
£39,091,137
Finally, the table below shows current and projected future rates bills along with likely savings, for pubs with rateable values at selected levels.
RV (£)
New system from April 2017
Current system
Annual change
3000
£0
£0
£0
9000
£0
£2,178
-£2,178
12000
£0
£5,808
-£5,808
13000
£2,097
£6,292
-£4,195
14000
£4,517
£6,776
-£2,259
15000
£7,260
£7,260
£0
20000
£9,680
£9,940
-£260
30000
£14,520
£14,910
-£390
40000
£19,360
£19,880
-£520
50000
£24,200
£24,850
-£650
British Beer & Pub Association, Brewers’ Hall, Aldermanbury Square, London, EC2V 7HR. 020 7627 919999
Business Rates and Budget 2016 Introduction The BBPA has led calls for reform of businesses rates, given the burden they place on pubs. Changes announced in the Budget will result in significant savings for the sector, and particularly for small community pubs.
Changes in the Budget The business rates bill for any pub will continue to be derived from a combination of the rateable value (RV), the business rate multiplier and any applicable relief. From April 2017, there will be changes to the structure of the rates system and the reliefs. The multiplier is the rate at which the business rates bill is set, set in pence per pound of the rateable value. In England there are effectively two multipliers, one for small businesses and one for larger ones. The 2016 Budget announced changes to the thresholds at which these are set. The major change is that the threshold at which the small business multiplier is set has increased from £18,000 (£25,500 in London) to £51,000, significantly benefiting pubs. Pre-April 2017
Post-April 2017
Small business
Below £18,000 in most of Below £51,000 England, but below £25,500 in London
Large business
Above £18,000 in most of Above £51,000 England, but above £25,500 in London
There are currently 20,212 pubs that pay the small business multiplier but this will increase to 33,841, an increase from 49% to 81% of English pubs. For 2016 the reduced rate is worth 1.3 pence in the pound.
Small business
Pre-April 2017
Post-April 2017
20,212 (49%)
33,841 (81%)
British Beer & Pub Association, Brewers’ Hall, Aldermanbury Square, London, EC2V 7HR. 020 7627 9199
Small Business Rate Relief The other fundamental change announced in the Budget was to Small Business Rate Relief (SBRR). Currently this allows 100% relief to all properties with an RV of £6,000 and below. This then tapers to zero at £12,000. This was a rolling one-year extension of a statutory scheme that only allowed relief up to £6,000. SBRR is only applicable to businesses where the sum of their Rateable Values is below the threshold and only one property is assessed at an RV of over £2,600. For this reason, and because they tend to be larger, the vast majority of managed pubs will not receive this discount. In Budget 2016 it was announced that SBRR will be extended permanently to allow 100% relief to all properties with an RV of £12,000 or less and a taper from £12,000 to £15,000. RV
Current
Future
Pubs affected
% of total
0-6,000
Received 100% relief
Will receive 100% relief
3,609
9
6,000-12,000
Tapers from 100% to 0% Will receive 100% relief
12,684
31
12,000-15,000
No relief
Tapered relief 100% to 0%
from 3,683
9
Total impact for pubs The impact of these two changes is a more favourable business rates regime for pubs. The analysis below shows the impact of the changes, based on the difference if the measures were introduced in 2016/17. It therefore uses rates and reliefs applicable in this period. It should be noted that the measures do not take effect until April 2017, at which point all rateable values are likely to have changed as a result of the ongoing revaluation. In total, the measures are predicted to create a saving of over £39 million for English pubs, with 81 per cent of pubs benefiting from either a small business multiplier or Small Business Rate Relief, or both. Over 16,000 pubs will pay no business rates at all, 40 per cent of the total. Some pubs will not see a reduction in their bills as they currently pay zero, or are not receiving additional SBRR, and already receive the lower multiplier rate (pubs with an RV of £15-18k in most of England and pubs with an RV of £15k-£25.5k in London).
British Beer & Pub Association, Brewers’ Hall, Aldermanbury Square, London, EC2V 7HR. 020 7627 919999
RV
Pubs affected
% of total
Saving
0-6,000
3,609
9
£0
6,000-12,000
12,684
31
£21,071,255
12,000-15,000
3,683
9
£12,677,704
15,000-51,000
17,474
42
£5,342,179
Total
33,841
81
£39,091,137
Finally, the table below shows current and projected future rates bills along with likely savings, for pubs with rateable values at selected levels.
RV (£)
New system from April 2017
Current system
Annual change
3000
£0
£0
£0
9000
£0
£2,178
-£2,178
12000
£0
£5,808
-£5,808
13000
£2,097
£6,292
-£4,195
14000
£4,517
£6,776
-£2,259
15000
£7,260
£7,260
£0
20000
£9,680
£9,940
-£260
30000
£14,520
£14,910
-£390
40000
£19,360
£19,880
-£520
50000
£24,200
£24,850
-£650
British Beer & Pub Association, Brewers’ Hall, Aldermanbury Square, London, EC2V 7HR. 020 7627 919999
