December 4, 2017

BUSINESS RATES IN THE BUDGET

The headlines following the Chancellors budget revolve mainly around the number of new homes to be built but Business Rates did get a mention and the key points are detailed below:

Staircase Tax Axed

The Staircase Tax as it has become known came about following a Supreme Court decision that ruled that if a business occupies multiple floors in buildings (or adjacent industrial buildings) this should be separately assessed for the purposes of business rates.  This has caused problems for occupiers with the following effects:

  • An increase in Rates payable
  • An increase in paperwork
  • In some instances, a loss of Small Business Rates Relief

Philip Hammond announced that the Government is to publish draft legislation on this shortly which will enable affected businesses to override the Staircase Tax and ask the Valuation Office agency to have their original reinstated and backdated to 1 April 2010.

Relief Extended for Pubs 

Public houses are again reserved for special treatment and those with a Rateable Value of below £100,000 will benefit from a reduction of £1,000 to their Rate bills in 2018/2019.

More Frequent Valuations 

Since 1990 revaluations have taken place every 5 years with the exception of the 2010 revaluation which was in place for 7 years.

From 2022 revaluations will take place every 3 years however there is no reference to the self assessment system which the Government has recently consulted on.

RPI to CPI Brought Forward 

The business rates multiplier has historically been based upon RPI however the plan to switch this to CPI has been brought forward by 2 years to take effect from 1 April 2018.

The result of this is that instead of an increase of 3.85% from 1 April 2018 the multiplier will now increase by 3%.

Alastair Fearn, Director within FHP’s Business Rates team commented:

“The biggest surprise for me is the Government introducing legislation in relation to the Staircase Tax.  Whilst the Supreme Court decision in Woolway vs Mazzars has brought us problems the very essence of nature Rating is that there are so many different types of buildings and scenarios so to legislate to try and create a black and white set of rules will be very difficult.

I await with interest to see how this is dealt with.

The decision to bring forward the switch from RPI to CPI based in increases is good news for businesses simply because their annual increases will be at a lower rate and the more frequent valuations have been requested for some time and should result in a greater degree of accuracy within the Rating List.”

For further information on how FHP can help you please contact Alastair Fearn at FHP on 0115 8413913 or alastair@fhp.co.uk.

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