By accepting you will be accessing a service provided by a third-party external to https://www.pinneytalfourd.co.uk/
The subject of business rates has been a hot topic in the news recently, with PricewaterhouseCoopers reporting that 1,123 stores have vanished from Britain's top 500 high streets in the first six months of this year. As a result, a recent conference on business rates has called for a shake-up. But how?
What are business rates?
Non-domestic business rates are effectively a tax on commercial property, such as shops, offices, warehouses and hotels. Payment is based on the Valuation Office Agency's assessment of the rateable value of the property, or rather, a value that represents the yearly rent at which the property could have been let on a certain date. The rateable value is then multiplied by a figure set by government and the result determines the charge. Having been introduced during the reign of Elizabeth I as a means of collecting money to assist the poor, business rates are today an important means of local authorities funding budgets for local services, raising around £23.9 billion in England annually.
Leaving aside the level at which rates are set, this of course means that the more frequent the revaluation, the more accurate the calculation of the tax liability to be levied on a single property: revaluations are intended to reflect changes in local property markets. The last revaluation took place in 2017, which set open market rental values as at 1 April 2015. Rateable valuations formerly took place every 5 years but, in the Autumn budget of 2017, it was announced by the Chancellor that future revaluations would take place every 3 years and, in the Spring statement of 2018, the Chancellor announced that the next revaluation would be brought forward by one year to 2021, meaning that market rent values would be calculated to 1 April 2019. But do such measures go far enough?
The discussion on business rates
It will come as no surprise that there are differing opinions on the issue of business rates and revaluation. Business rates: delivering more frequent revaluations, a government report published in March 2018, noted that while stakeholders argued that 'more frequent revaluations would make valuations fairer and more closely aligned to the market', local authorities were concerned about the increase in resources required and their resultant impact on 'the stability of local government finance.' With the role of online-retailers ever increasing, and with both Labour and the Conservatives promising a full review of the business rates system in recent manifestos, the debate about their future is growing. Some politicians have vowed to scrap business rates for small retailers altogether.
At the recent Confederation of British Industry Business Rates Conference, the president of the CBI, John Allen, called the current system of business rates "uneconomical, unsustainable, and frankly, unintelligible." He argued that revaluations do not keep up with fluctuating property values, punishing areas that are already struggling and undermining those on the way up, and that businesses are less likely to make capital investments or upgrades to existing property as both are likely result in an increase in rateable value and as a consequence the rates payable.
Proposed changes to the system
At the business rates conference, the proposed changes include:
The future for business rates