Business Rates – Some Good News

There was a small, early Christmas present in the autumn budget proffered by Mr Hammond last week with regards to business rates.

Firstly, the government has opted to base the annual increase to business rates on the Consumer Price Index (CPI) as opposed to the Retail Price Index (RPI). The change was planned for 2020 but has been brought forward to 2018. Lots of payments are linked to inflation – pensions, benefits, index-linked savings…The higher the inflation figure, the higher the payments. RPI almost always gives a higher figure for inflation than CPI does, thus the change from RPI to CPI should result in lower business rates.

Secondly, it has been announced that rateable values will be recalculated every three years as opposed to every five years. Many small businesses were hit hard by steep rises when rateable values were recalculated in 2017 when the first revaluation in seven years took effect, some businesses faced an increase of more than 100%. The proposal to carry out the revaluation every three years should spread any increase and smooth spikes in the revenues generated.

There has also recently been a promise to scrap the so-called “staircase tax” which potentially placed an additional burden on businesses in offices linked by a communal lift, staircase or corridor by treating them as occupying two or more properties rather than one. Liabilities were being backdated to 2015 and resulted in large bills for some companies. Fortunately, the Supreme Court has intervened following a challenge and the legislation has been consigned to the scrap heap.

Whilst many were hoping for a freeze on business rates for the foreseeable future the budget does go some way to give confidence to SME’s at least as regards some of their property outgoings.

MORE INFORMATION 

If you require further legal advice on the upcoming changes to business rates and what this means to you as a business owner, please contact our Commercial Property Department – our team of expert solicitors will be able to assist and can offer free initial advice. Call on 01708 229444 or email us using our contact form.This article was written by Julien Pritchard, Commercial Property Partner at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of November 2017.