Government to pocket a cool £25 billion following business rates hike

The Government is set to cash in to the tune of £25 billion as it reaps the rewards of last year's controversial business rates hike.

The amount of money raked in from businesses by local authorities in England is set to rise by £845 million to £24.8 billion for 2018/19.

It comes despite a hefty drop in the number of firms questioning their business rates bill, fuelling concerns that a new appeals system makes it harder for companies to lodge challenges.

Appeals under the new Check, Challenge, Appeal system reached 12,840 in the first nine months, compared to 169,300 appeals during the first full-year of the previous regime, according to the Valuation Tribunal Service (VTS).

Altus Group, Britain's largest ratings advisory firm, is handling 20% of the appeals made so far under the new system.

Robert Hayton, executive vice president of business rates at Altus, said: "We have nearly £5 billion of rateable value currently under instruction with a view to bringing appeals where errors exist, and are making these regulations work for our clients.

"The early signs are promising, and incorrect tax assessments are being rectified.

"The acid test will be how responsive the system is to added volume over time and whether the work to reverse the Staircase Tax will have an adverse knock on effect."

The business rates overhaul on April 1 saw 1.9 million properties in England revalued and left many businesses facing crippling hikes.

Independent forecaster the Office for Budget Responsibility (OBR) has revealed that £4.5 billion has been set aside to cover tax rebates across England over the next five years.

The Government has come under heavy fire over the complexity of the new appeals system - with crossbench peer John Lytton telling the House of Commons earlier this year that it involved "the most torturous" registration and had been designed to "prevent appeals".

Chancellor Philip Hammond sought to appease concerns over the rates revaluation, announcing a £2.3 billion reprieve in the Budget by bringing forward plans to switch the inflation measure used to calculate annual increases.

He also revealed plans to reduce the period between revaluations to every three years and said he would extend a £1,000 discount on bills - for those with a rateable value of less than £100,000 - for another year until March 2019.

But he was condemned for not doing enough to support struggling firms, with many calling for a rates freeze and others demanding a full overhaul of the system.