Correspondence

2/2024: Spring Budget 2024

Published 21 March 2024

Applies to England

To: Chief Finance Officers of English Billing Authorities - For the attention of the Business Rates section

From: Non-Domestic Rates Team, LGF - Local Taxation, Department for Levelling Up, Housing and Communities (ndr@levellingup.gov.uk)

Date: 20 March 2024

Business Rates Information Letter (2/2024): Spring Budget 2024

This is the second business rates information letter to be issued by the Department for Levelling Up, Housing and Communities in 2024. 

See previous letters and archived letters.

This letter covers:

• film studios - business rates relief
• freeports and investment zones - business rates relief
• government response to the business rates avoidance and evasion consultation and changes to the empty property regulations
• interest rate for 2024/25 - payable on refunds

1. Film studios - business rates relief

At the Spring Budget on 6 March 2024, the Chancellor announced that the government would continue to support the creative industries and set out that it would introduce a business rates relief for eligible film studios in England worth around £470 million over the next 10 years.

Eligible film studios in England will receive a 40% reduction on gross business rates bills until 2034, backdated to 1 April 2024. The 40% reduction is inclusive of transitional relief. The value of any transitional relief a studio receives will be deducted from the value of the film studio relief. This means that eligible film studios’ final bills will be no more than 60% of their gross bill. English local authorities will be fully compensated for the loss of income incurred as a result of this relief and will receive new burdens funding for administrative and IT costs.

We expect that around 40 existing film studios may be eligible for support, located in around 25 local authorities, plus any additional new studios that are built which may be eligible. The relief will be available on properties valued by the Valuation Office Agency (VOA) as film studios and the VOA will notify authorities of which studios are eligible for support. Guidance for local authorities will be published in due course, setting out the details of the relief, including the treatment of transitional relief and operation of the scheme.

2. Freeports and Investment Zones - business rates relief

At the Spring Statement, the government confirmed that the extension to Freeport tax reliefs to September 2031 which was announced at Autumn Statement 2023 will apply across English Freeport tax sites. The tax reliefs available in Freeport tax sites will be extended from 5 to 10 years, until September 2031 in England. The government also announced further details on Investment Zones.

Updated guidance for local authorities on Freeport business rates, and new guidance on Investment Zone relief – including the treatment of Subsidy Control – will be published in due course.

3. Government response to consultation on business rates avoidance and evasion and changes to the empty property rate relief reset

At the Spring Budget, the government also published a summary of responses to the business rates avoidance and evasion consultation.

The government response outlined reforms to combat abuse of the system and set out that the government would bring forward legislation to amend the Empty Property Relief ‘reset period’ from 6 weeks to 13 weeks. Authorities should note for their systems, the Non-Domestic Rating (Unoccupied Property) (England) (Amendment) Regulations 2024 and the accompanying Explanatory Memorandum.

The Regulations and Explanatory Memorandum explain how the transitional provisions will operate. The current 6 week reset period requirement will therefore still apply where that period started before 1 April 2024 and ends on or after that date. If a previously empty property is reoccupied on or after 1 April 2024, it must be occupied continuously for 13 weeks before it can benefit from a further period of empty property rate relief.

The Regulations have now been laid and subject to the will of Parliament, will come into force on 1 April 2024.

In addition, the government’s response recognised the concerns raised in the consultation about the emergence of new avoidance schemes. The government will therefore consult on introducing a ‘General Anti-Avoidance Rule’ (GAAR) for business rates in England. This would provide the government with greater flexibility to tackle emerging avoidance schemes as they materialise. The consultation on introducing a GAAR will be published in due course.

To address ‘rogue’ business rates agents that prey in particular on small business owners with a lack of understanding of the system, the government will bring forward increased communications to raise awareness of available reliefs and how ratepayers can engage reputable agents. This may include changes to the Demand Notice regulations on how to instruct an agent, as well as potential measures to increase ratepayer’s awareness on the reliefs available to them and how to access support. The government will work with local authorities to discuss the approach to the changes.

4. Interest rate for 2024/25

The Non-Domestic Rating (Payment of Interest) Regulations 1990 provide that the rate of interest payable on refunds of overpaid rates, arising from alterations to the rating list, should be set for any year at one percentage point below the standard rate at 15 March (or the next business day) in the preceding year.

On 15 March 2024, the standard rate was 5.25%; therefore, the rate of interest to be applied by local authorities for the rating year 1 April 2024 to 31 March 2025 is 4.25%.

Billing authorities are responsible for the local administration of non-domestic rates; this includes billing and collection. Where local billing teams are unsure regarding a billing issue and how interest should be calculated they should, in the first instance, approach their legal team for advice or contact a relevant professional organisation.