Consultation outcome

Technical adjustments to the Business Rates Retention System in response to the Non-Domestic Rating Bill

From:: Department for Levelling Up, Housing and Communities
Published: 28 September 2023
Last updated: 13 December 2023 — See all updates

Applies to England

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Technical adjustments to the Business Rates Retention System in response to the Non-Domestic Rating Act: outcome and response

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Detail of outcome

This document summarises the responses and gives the government’s reply to the consultation covering proposals for an updated technical adjustment to the Business Rates Retention (BRR) system in light of new powers introduced in the Non Domestic Rating Act.

The Non-Domestic Rating Act has decoupled non-domestic rating multipliers. Previously the standard multiplier was derived by adding a supplement (1.3p in 2022-23) to the small multiplier. In future, the small and standard multipliers will be set independently of each other. The 2023 Act requires both multipliers to rise in line with the annual change in the Consumer Price Index (CPI), unless the government chooses to under-index one, or both multipliers.

At the Autumn Statement on the 22 November 2023, the Chancellor set business rates multiplier for 2024-25. The decision increases the gap between the two multipliers. It has consequences for the business rates retention system under which local authorities retain a portion of the rates they collect locally. It is questionable whether the annual uprating of key elements of the business rates retention system should continue to be linked to the change in the small multiplier only.

Original consultation

Consultation description

The Non-Domestic Rating Bill, currently before Parliament, brings forward changes to the ways that business rates multipliers will be calculated and applied. Subject to the passage of the Bill through Parliament, it is anticipated that the changes could be implemented from 2024-25.

As a consequence of the Bill changes, we are considering making technical amendments to how we administer the Business Rates Retention System (BRRS). These amendments would be necessary to maintain the accuracy of levy and safety net payments and future income compensation paid to local authorities for the impact of tax policy decisions. We intend to implement these technical changes to the BRRS for 2024-25 to align with the commencement of the provisions in the Non-Domestic Rating Bill relating to multipliers.

The government seeks views on its proposals, principally on the updated technical adjustments that we propose to make. It particularly welcomes views from councils, their representative groups and sector experts.

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