The budget announcement in November brought significant updates regarding business rates that could have serious repercussions for the leisure industry. With the planned reduction of Retail, Hospitality, and Leisure (RHL) relief set for 2025, alongside a rating revaluation on the horizon, leisure operators are at a crucial crossroads. This article looks into the changes and challenges operators within the industry face.
Impact of budget changes on leisure business rates
While the changes to the national insurance thresholds have understandably drawn most coverage, the leisure industry will be hit harder than most by yet another inflation-busting increase in living wage. However, much less noise has been made about changes to the way business rates are calculated, which promises further short-term pain for many leisure operators.
Since 2022, the Government’s Retail, Hospitality and Leisure relief (RHL) scheme has enabled leisure operators to benefit from a business rates discount of up to 75%, subject to an annual cap across all their properties of £110,000 per annum. In the budget, it was announced that from April 2025, this discount is being reduced to 40%, subject to the same cap. Operators of an attraction or attractions with an aggregate Rateable Value of more than £500,000 should not see a change as they will continue to benefit from the full £110,000. However, those below the £500,000 level will be worse off as a result of this change, as demonstrated below:
Current Rateable Value (RV) – £250,000 (sole attraction operator)
Future revaluation and proposed rate relief
The next rating revaluation is due in April 2026. Whereas currently, rating assessments should reflect the depressed levels of value caused by the Covid-19 pandemic, the next revaluation will see all property reassessed as at 1 April 2024 levels. With the majority of Covid-related valuation discounts likely to be removed, this is expected to result in some significant increases in assessments. However, in their most recent rating bill, the Government have sought to relieve some of this pain by announcing that it is considering introducing future discounts to the current rates multiplier, which would again be aimed at supporting the retail, hospitality and leisure sectors. This would be specifically targeted at those with Rateable Values lower than £500,000, with greater discounts for Rateable Values under £51,000. The flip side is that a surcharge on larger property occupiers would fund this.
We are actively working with clients to explore ways to challenge their rate assessments and mitigate rates liability. Our expertise in navigating the complexities of business rates has helped us secure some significant savings for our leisure clients, ranging from the largest corporate operators to smaller family-owned attractions.
If the changes in business rates and the upcoming revaluation are causing concern, don’t navigate this alone. Reach out to us for expert guidance in managing and potentially reducing your business rate liabilities.
