Consultation outcome

Business Rates Improvement Relief draft regulations: summary of responses and government response

Updated 14 December 2023

Introduction

1. From 1 April 2024 the Improvement Relief scheme will ensure that no ratepayer will face a higher rates bill for 12 months as a result of qualifying improvements to their property.  On 5 June the government published draft regulations and consulted upon whether those regulations delivered upon the policy objectives of the Improvement Relief scheme.

2. This publication summarises the responses to that consultation and sets out the government’s response.  The government will lay the final regulations which will come into force from 1 April 2024.

Summary of responses and government response

3. There were 24 responses to the consultation comprising:

Respondent Type	Number of Responses
Ratepayers	2
Agents	4
Trade bodies	2
Professional bodies	3
Local authority and representative bodies	12
Other	1

4. 13 respondents said that the regulations delivered the policy objectives of the Improvement Relief scheme.  10 respondents raised points about the draft regulations within scope of the consultation – a summary of the points made and the government’s response is set out below.

5. Some respondents questioned whether paragraph 4(1) of the draft regulations captured situations where an additional building is added to an existing large hereditament.  The government agrees that the proposed wording is unclear in respect of hereditaments with multiple buildings and has amended it in the final regulations.

6. Some respondents questioned whether the term “completed” used in the regulations without definition could lead to uncertainty.  The concept of when a set of works has been completed such as to become rateable will vary by case to case and is already determined in line with established caselaw.  Accordingly, the government does not believe it would be desirable to attempt to define “completed” for the purpose of these regulations.  The Valuation Office Agency (“VOA”) determines and provides guidance on whether and when works can become rateable.

7. Some respondents were concerned that if the issuing of certificates was left in the regulations to individual valuation officers it could lead to inconsistency across England.  The statutory duty to compile and maintain rating lists sits with individual Valuation Officers (“VOs”) and, therefore, that structure is replicated for the issuing of certificates in the regulations.  However, the VOA will provide guidance and implement a process across its network to ensure consistency and address this concern.

8. Some respondents felt that the regulations should include set timeframes – typically 3 months - by when VOs must issue certificates.  The government does not consider a statutory time limit would be appropriate for Improvement Relief certificates as each case will differ in complexity. However, to address this concern the VOA will instead work to operational time limits and to existing service level agreements with Billing Authorities when issuing improvement relief certificates.  This will ensure that certificates are issued alongside the associated alterations to the rating list and that ratepayers do not see their bill rise before a certificate is issued.

9. Some respondents felt that the definition of qualifying connection in regulation 3 (by which certain changes in occupier would not in isolation remove eligibility for Improvement Relief) should be expanded to companies outside of a Group who nevertheless have a common interest in a property.  The example given was a company owning a pub (“pubcos”) and the person planning to operate the pub under a tenancy (known in pubs as landlords).  The intention of the qualifying connection test is to lift the corporate veil and ensure the occupation text can be met across subsidiaries within the same Group.  Whilst the government recognises that pubcos and pub landlords may work closely on improvements to pubs, the relationship remains more analogous to a landlord making improvements to their asset prior to a tenant taking occupation rather than to subsidiaries in a Group.  As the government made clear in its earlier technical consultation (paragraph 4.12 of the technical consultation), supporting landlords with improvements to their assets is beyond the intended scope of Improvement Relief.

10. In addition a number of respondents made points concerning how the improvements would be identified and certificates issued to local authorities.  These points are out of scope of the consultation.  Nevertheless, once the VO becomes aware that improvements have been made (usually either directly from a ratepayer or from the local authority) any qualifying works will be identified for certification. The VOA is already working with local government on the systems and processes necessary to deliver Improvement Relief and we expect the VOA and local authorities to be able to do this in the normal course of business.  For example, we expect the certified values and effective periods to be delivered to local authorities alongside the related rating list update. This should ensure businesses quickly receive their relief.

Next steps

11. The government will now make the final regulations which will come into force on 1 April 2024.  Improvement Relief will commence for eligible improvements which are completed on or after 1 April 2024.