Many businesses will be disappointed by the outcome of the current business rates review expected in The Budget explains Robert Brown BSc FRICS FIRRV, partner at Sanderson Weatherall and current president of The Rating Surveyors’ Association.
The government raises some £23 billion per annum from business rates and this funding would always have to be found from somewhere – so large scale changes are unlikely in the near future. Instead the business rates review is almost certain to confirm that the 2017 rating revaluation will have its full effect and that any radical new future proposals will be firmly pushed back to 2020 or beyond.
What’s more, UK businesses are about to receive their new business rates bills and for many ratepayers yet another increase in outgoings will prove unpalatable, if not unacceptable.
The anticipated rise of around 0.83 per cent is not nearly as high as the expected four per cent council tax rise planned for many households, but that is hardly likely to have business occupiers dancing in the streets!
However, with the valuation date moving forward seven years from April 2008 to April 2015, business rates should once again be more fairly based on the current rents that tenants actually pay to their landlords.
After all, the idea of a revaluation is not to increase business rates charged, rather it is to “reset the clock” to up-to-date values and thereby provide relief to those businesses whose property rents have clearly fallen due to the recent recession.
As rental values for many types of property have not recovered to their pre-recession levels, many shops, offices and industrial properties in Yorkshire and the rest of the north will enjoy newer, much lower rateable values.
However, the government will typically introduce a transitional relief scheme to phase in value changes on any new revaluation. This could result in large offices in the City of London having their expected increases in rates phased in over several years, in effect funded by businesses in the north of England which may have justifiably expected to receive big falls in their rates bills straightaway. This will not be clarified until 2017, and is certainly something that businesses in the rest of the UK should be aware of.