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| Business Rates Supplement | |
|---|---|
| Name | Business Rates Supplement |
| Type | Tax Supplement |
| Country | United Kingdom |
| Introduced | 2005 |
| Administered by | Local authoritys / Welsh Government / Scottish Government |
| Legal basis | Business Rates Supplements Act 2009 |
| Revenue year | 2019–2020 |
Business Rates Supplement is a UK statutory levy applied to certain non-domestic properties to fund infrastructure projects and city development initiatives. It operates alongside the national non-domestic rating system administered through local billing processes and interacts with devolved fiscal arrangements in Wales and Scotland. The charge has been used to finance urban regeneration, transport schemes and public realm improvements in major conurbations such as London, Greater Manchester and Leeds.
Business Rates Supplement was established as an additional levy on large commercial hereditaments to raise targeted capital for strategic projects. The measure complements the national non-domestic rating framework set out in statutes associated with Rating and Valuation Act 1999 and later amendments by the Local Government Finance Act 1988 lineage. Its design mirrors other local hypothecated levies like the Mayoral Precept and municipal bonds issued by authorities such as Transport for London and Greater London Authority.
The statutory underpinning permitting the imposition of a Business Rates Supplement is encapsulated in the Business Rates Supplements Act 2009 and subordinate instruments that define scope, limits and procedural requirements. Supplement powers are conferred on qualifying billing authorities and, in London, on the Mayor of London acting through the Greater London Authority. Implementation requires statutory consultation with affected ratepayers, compliance with state aid rules as interpreted by European Commission decisions prior to Brexit referendum 2016, and coordination with legislation such as the Localism Act 2011. Judicial review claims have arisen under principles articulated in cases from the Administrative Court and the Court of Appeal.
Calculation of the Supplement is a percentage uplift applied to the chargeable amount of business rates for hereditaments above a prescribed threshold. The percentage rate, maximum duration and relief bandings are specified by the billing authority in accordance with limits set by statute and guidance from Department for Communities and Local Government (now Department for Levelling Up, Housing and Communities). Collection is undertaken via existing non-domestic rates billing cycles by local billing teams in authorities such as Birmingham City Council, Manchester City Council and Leeds City Council. Audits and valuation inputs reference lists maintained by the Valuation Office Agency and disputes may be escalated to the Valuation Tribunal Service.
Statutory exemptions exclude certain hereditaments from the Supplement, including properties already subject to earmarked levies, some charitable premises registered with Charity Commission for England and Wales and other categories defined in secondary legislation. Reliefs mirror elements of national relief regimes like small business rate relief administered under rules influenced by the Small Business, Enterprise and Employment Act 2015. Affected ratepayers may pursue formal appeals via the billing authority, seek informal redetermination, or initiate appeals to the Valuation Tribunal for England and, where point of law arises, to the Upper Tribunal (Tax and Chancery Chamber).
Proponents argue the Supplement channels local benefit from commercial growth into capital projects delivering returns for ratepayers and supporting economic actors such as developers and transport operators. Critics, including business organisations like the Federation of Small Businesses and British Chambers of Commerce, contend it raises costs for ratepayers, may distort investment decisions by multinational firms such as HSBC and Tesco, and risks double taxation alongside national rating revaluations conducted by the Valuation Office Agency. Academic commentators from institutions such as London School of Economics and University of Manchester have examined distributional effects and competitiveness implications for regional centres including Bristol and Newcastle upon Tyne.
Revenue raised by the Supplement must be ring-fenced for projects specified in the charging authority's proposals, often set out in capital programmes and planning instruments like local infrastructure plans submitted to bodies such as the Mayor of London or combined authorities including West Midlands Combined Authority. Allocation decisions involve partnerships with transport agencies like Transport for Greater Manchester, housing bodies such as Homes England, and regeneration arms of councils like Liverpool City Council’s development company. Financial controls adhere to audit frameworks overseen by the National Audit Office and internal audit provisions governed by the Public Sector Internal Audit Standards.
The instrument emerged in early twenty-first-century fiscal reform debates alongside calls for greater fiscal devolution to city-regions such as Greater Manchester Combined Authority and Cambridgeshire and Peterborough Combined Authority. Subsequent reform proposals have included abolition, replacement by a broader commercial tax modeled on proposals from think tanks like the Institute for Fiscal Studies and the Resolution Foundation, or integration into mayors’ business rates retention pilots piloted with authorities including Greater London Authority and Sheffield City Council. Political discourse around the Supplement intersected with policy shifts following the Spending Review 2010 and ongoing devolution settlements initiated under successive cabinets led by figures such as David Cameron and Theresa May.