Government issued £33m tax revision for firms after Budget

Become an Independent member to bookmark this article Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Membership today. Join today Already a member? Log in The Government revised property tax discounts for businesses across the UK days after details were issued to councils. High street businesses will receive £33 million more in discounts than councils were initially told, after a correction was issued last weekend.

Original guidance to councils in England had initially failed to take into account inflation and therefore had to be adjusted. Retail, hospitality and leisure firms were initially due to receive a 5p discount in the multiplier used for tax calculations. However, the rate of discount was set to be eroded by inflation, with bills set to be uprated by the 3.5% rate of inflation recorded in September. As a result, officials quickly issued new guidance that the national multiplier will increase from 5p to 5.2p next April in order to remain proportionate to tax bills.

The small business RHL (retail, hospitality and leisure) multiplier was revised from 39.7p to 39.5p, while the standard RHL multiplier falls from 44.7p to 44.5p. The Government told council officials that the revision ensures inflation adjustments are now applied consistently and reflects its policy intention, but it did not clarify whether the original figures reflected a calculation error or omission. The Department for Housing, Communities and Local Government has been contacted for comment.

Alex Probyn, practice leader, property tax, Europe and Asia-Pacific at global tax firm Ryan, said “the correction is welcome”. “Increasing the discount protects its value against inflation and is good news for retail, hospitality and leisure businesses,” he said. “But stability and certainty start with getting the published tax rates right. “Businesses and advisers began planning around the figures issued on Budget Day, only for those rates to change within days.

“The interaction between inflation and a fixed discount was entirely foreseeable. “Businesses should have been given the correct figures on Budget Day.”