Business Rates Update
Business Rates is still a hot topic with many different experts passing comment on the current legislation, the impact this is having on Businesses and what should be done By the Government to alleviate some of the difficulties. Rod Edwards, Director and Head of Rating provides a summary of some of these issues.
The Grimsey Report
In September last year, former Focus Retail boss, Bill Grimsey released his report on the state of the High Street. The Grimsey Review made 31 recommendations to the Government, six of which related specifically to business rates:
- Reintroduce immediately the 2015 business rates revaluation to realign property values and freeze business rates from 2014.
- Once revaluations have taken place any future increases should be an annualised Consumer Price Index (CPI) inflation rate rather than a one-month snapshot.
- From 2017 revaluations must be conducted annually.
- Any business occupying a retail property in the retail core of a town centre that has been vacant for 12 months should receive 50% rate relief for two years.
- There must be a political will and determination to reduce property taxation once the Government’s fiscal debt consolidation plans have been fully implemented.
- The business rates system needs a root and branch review to establish a flexible system that will reflect changes in economic conditions as they occur.
The report makes interesting reading and the six points above specific to business rates make plausible sense. However, there has been a general tit-for-tat between Grimsey and Mary Portas since the review was released, with new High Streets Minister, Brandon Lewis, also chipping in and referring to much of the report as “a load of crap”. Presumably, with the latter two being backed by the Government, their responses are not a surprise, but with a significant amount of High Streets dying a death from the burden of high business rates, something needs to be done. The suggestions by Bill Grimsey are certainly a sensible step in the right direction and one that the rating industry and occupiers on the high street would welcome.
The Chancellor gave his Autumn Statement on Thursday 5th December 2013 which contained some important changes for business rates including:
- Business rates liability will be limited to a 2% increase from 1st April 2014 instead of 3.2% in line with September 2013 RPI.
- 100% Small Business Rate Relief extended for a further 12 months up to April 2015 (Approximately 360,000 businesses will continue to receive full benefit, with a further 180,000 benefitting from the tapering relief).
- Change to the Small Business Rate Relief criteria which will allow small businesses to take on an additional property and keep the original relief for a further year.
- Retail premises (to include pubs, cafes, restaurants and charity shops) up to RV £50,000 will receive a discount of £1,000 in their rates bills during 2014/15 and 2015/16.
- Introduction of temporary re-occupation relief for new occupants of retail property that has been vacant for more than 18 months. The 50% discount on business rates liability will be effective after 1st April 2014 and on or before 31st March 2016.
- Commitment to resolve 95% of the 168,000 rating appeals that remain outstanding on the 2010 Rating List by July 2015.
- From 1st April 2014 rates bills will be spread over 12 monthly instalments instead of 10.
- Consultation will be carried out in 2014 on the changes that are required to achieve greater transparency within the rating system and administrative reform post the 2017 Rating Revaluation.
At last the Government has finally woken up to the fact that the crippling level of business rates liability is having a major impact on the high street and small business. The changes are obviously a move in the right direction, but are very “retail” biased and do not take into account the many other struggling business sectors.
Business rates liability will still increase by just over 2% from 1st April 2014 with the revised multiplier being confirmed at 0.482 pence in the pound. The Government failed to mention the increase in the small business rate relief supplement from 0.009 to 0.011, so a stealth tax increase in the background when they were busy promoting their cap on the RPI increase!
The postponement of the 2015 Rating Revaluation was obviously ignored and the burden of empty rates liability fully remains on non-retail property. The commitment to clear 95% of rating appeals currently outstanding is a bold statement, which will simply not be achieved unless the Valuation Office Agency is forced to give greater transparency and co-operation to ratepayers and their agents.
To discuss how we can help you with any of your Rating issues, please contact our Rating team on 0333 6000 110 or click here to email
Written by: Richard Roe on Tuesday 07/01/2014