The Non-Domestic Rating Act 2023 became law in the Autumn of 2023, affecting all occupiers, owners and investors in commercial property.

It introduces a number of changes to the Business Rates system, some of which will fundamentally change the way ratepayers need to manage their businesses.

These changes range from minor to critical, with the most important one being the new ‘duty to notify’. This duty takes immediate effect, although there is not yet a mechanism through which anyone can actually comply, but it requires all ratepayers to notify the Valuation Office Agency (VOA) of any change to a property they are responsible for, whether it has an existing rateable value or not, within 60 days of the change. This means any physical change to a property such as an extension or the installation of air conditioning will need to be notified. Tenure changes may also fall under this new amendment, such as a lease renewal or a rent review, but this remains to be confirmed. This new legislation signals a step towards self-assessment and will fundamentally change the way ratepayers and prospective rate payers operate.

Other important changes relate to completion notices, material changes of circumstances and improvement relief.

Improvement relief is the good news that follows changes to the duty to notify. Under the new legislation, occupiers who undertake any new improvements after 1st April 2024 will get a 12 month exemption from Business Rates payable on the improvement. It is important to note that occupation of the existing property must continue during the works and landlords undertaking the works will not qualify for this relief.

Completion notices are the mechanism by which a local authority can force a new building to be assessed for rates before it has been occupied. The new legislation extends this to properties that have had their rateable values removed from the Rating List during a refurbishment but remain unlet. It is possible to appeal against a completion notice, but the window to do so is very small and it remains to be seen if local authorities will embrace this new change as there’s a fine balance between increasing revenue generated from the Business Rates system versus stifling investment in their area.

Material change of circumstances appeals (ie building works) have been restricted as the new Act removes the option to appeal for a rates reduction as a result of any negative impacts on the use or enjoyment of a property as a result of Government or local authority imposed restrictions. While this might be seen as bad news, in reality it is an extension of the legislation introduced during the Covid-19 lockdowns and we do not expect this will have far reaching consequences. The opportunity to appeal for a reduced rateable value where a property is otherwise affected by external or internal disruption remains and should be considered.

The minor changes are that the change to the frequency of rating revaluations from every five years to every three years has now become law; and a ratepayer, or their representative, can now request data from the VOA on how their property has been valued.

While there is likely to be a steep learning curve ahead of us, along with teething problems of a new notification system, it is critical that you understand how these new changes impact your property.

Further information

Contact David Parker

Business Rates