- Editorial Team
- Comments Off on Small Businesses Get Temporary Relief from 2023 Revaluation
- Blog, Commercial Property, Pubs, Retail Property
Chancellor Jeremy Hunt’s Autumn Statement was a mixed bag of both good and bad news. On the good side, the Government are offering a tax relief package worth nearly £14 billion aimed mainly at small businesses. Unfortunately, the bad news is that the planned revaluation for 2023 will take place as scheduled. Both scenarios will have an impact on commercial property values.
Given that we’ve had so much bad news recently, let’s focus on the good news instead. One way the proposed tax relief will be implemented is by way of a rate freeze on small businesses. The rate freeze only applies in 2023 for now, and there is no guarantee it will be renewed for the following year. But freezing rates and unlinking them from inflation represents tax savings of more than £9 billion just by itself.
Pubs, Restaurants, and Shops
Small businesses most likely to be positively impacted by the proposed tax relief include pubs, restaurants, and smaller high street shops. These are all businesses that are disproportionally affected by the combination of persistent inflation and higher rents. Offering tax relief brings some much-needed stability that could save many businesses from having to close.
The only downside is that tax relief is capped at £110,000 per business. But £110,000 in tax relief is better than no relief at all. The Government also points out that high street retailers who own their properties will actually benefit from next year’s revaluation. They should see both rents and property values begin to stabilise.
Prepare to Sell Your Property
As a property owner, tax relief is almost always good for you. But if you own a pub, restaurant, or small shop in an economically depressed area, next year’s tax relief could be just what you need to stabilise your business in advance of selling your property.
Pubs and restaurants are especially attractive to investors right now. Both types of businesses ended up doing well toward the end of the pandemic. Now, even with the pandemic mostly behind us, pub and restaurant business has exploded. Moreover, it continues to grow. Any pub or restaurant capable of demonstrating consistent profits becomes an attractive investment target.
With next year’s tax relief should come more growth for pubs and restaurants. Between rent stabilisation and a barely noticeable tax increase, property values should reflect greater interest. So if you’ve been planning to sell but have been waiting for the right moment, that moment could be just around the corner.
Nothing Beyond 2023
We cannot stress enough the need to play close attention to what is going on in the UK commercial property market. It was just a few years ago that market prices peaked. But with inflation a reality and a recession likely, property prices have been falling. Waiting too much longer to sell could mean not getting a good price for your property.
We have no indication of what the Government will do from 2024 on. The business rate freeze announced by the Chancellor maybe left to expire at the end of next year. Why take that chance? If you have a strong and stable business and a valuable commercial property behind it, waiting to sell is probably not your best strategy.
In the meantime, small business owners all over the UK are welcoming the billions in tax relief offered by Chancellor Hunt. Perhaps critics are correct in asserting that the Government didn’t go far enough. But what they have offered is bound to be at least marginally beneficial to pubs, restaurants, high street shops, and other small businesses.
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