Last Wednesday George Osborne announced the 2016 budget with a number of measures that are set to have a significant impact on the commercial property sector with the permanent threshold increase for Small Business Rates Relief stealing the main headline for businesses across the UK.
Budget 2016 Overview
Our Budget overview details the significant announcements that are set to have a direct effect on the commercial property sector:
Small Business Rates Relief Scheme threshold increases:
The extension of Small Business Rates Relief was undeniably one of the most significant announcements of the budget with the threshold set to increase from £6,000 to £12,000 and Rateable Values between £12,000-£15,000 benefit from a pro rata increase. George Osborne announced that the doubling of this catchment is expected to now include an ‘additional 600,000 small businesses’ across the UK. In order to fund the extension of this relief, the Chancellor has capped debt interest payments used by larger companies to reduce their corporation tax bills to 30% of their earnings.
What is Small Business Rates Relief?
Small Business Rates Relief is a Government relief scheme available to businesses with only one commercial premises with a rateable value (rental value) below £12,000 (up from £6,000). The scheme enables businesses within this catchment to apply for complete exemption of Business Rates taxes.
The Small Business Rates Relief extension will start from the 1st April 2017 which is also the date that the new Rateable Values will be used to calculate business rates bills. These new Rateable Values will be based on the rental value of your property as at 1st April 2015. If a business falls within the catchment for Small Business Rates Relief then they must apply to benefit from it. This relief cannot be claimed retrospectively so it is highly advisable that if eligible, an application is submitted prior to the 1st April 2017.
The new Rateable Values will be published on the VOA website from 30th September 2016. If you believe any of the information used to calculate these new rates is incorrect then you should get in contact with your nearest Barker Storey Matthews office now part of Eddisons where one of our rating specialists can review the rateable value of your property and where appropriate, launch an appeal on your behalf. In some cases this could be the difference between small business rates relief entitlement.
We have a long track record of making successful challenges on behalf of our clients, in some cases obtaining significant refunds over £100,000. Our extensive knowledge and transactional database of the local area, which many firms from outside the region do not have access to, is often crucial for a successful appeal and as locally based Chartered Surveyors we are well placed to provide you with the most accurate advice.
So who actually benefits from this?
According to the VOA website, based on the last Rateable Values calculated using rental values at 1st April 2010, Small Business Rates Relief can be claimed by:
1,011 office properties registered in Peterborough, an increase of 355
1,231 industrial premises registered in Peterborough, an increase of 622
1,349 office properties registered in Cambridge, an increase of 505
774 industrial premises registered in Cambridge, an increase of 401
Bury St Edmunds
375 office properties registered in Bury, an increase of 126
658 industrial premises registered under Bury, an increase of 268
254 office properties registered in Huntingdon, an increase of 104
454 industrial properties registered in Huntingdon, an increase of 224
Collectively, 6,106 businesses listed by the VOA as within the catchment of the above cities and towns can benefit from Small Business Rates Relief. Of course, these figures are only indicative as they are based on Rateable Values at 1st April 2010 when the relief extension, which will be enforced from April 2017, will use the new Rateable Values. Despite this, they do provide some level of scope for the number of businesses within these locations that could benefit from the scheme. 2,605 of these companies will now be eligible as a direct result of last Wednesday’s announcement, a significant increase. This also highlights the importance of ensuring that the new Rateable Values for which will be published online in September are in fact correct.
What if your rateable values are outside of the threshold?
In addition to small business rates relief, Osborne also announced a significant increase to the upper threshold for the standard business rates multiplier (Uniform Business Rates) threshold. This multiplier was previously only applicable to properties with a rateable value between £12,000 and £18,000 but the increase will now see it extend to £51,000.
For more information about business rates or a rating appeal, contact your local Barker Storey Matthews Office now part of Eddisons.