Business rates review launched in 2016
Regardless of square footage, building type or location, every business tenant and commercial building owner has one liability in common: Business Rates.
The current system, where business rates are calculated according to the rental value of the property, has been in place since 1988. But they date back to the Poor Law established in 1601. No provisions or amendments have been made since then, despite recent decades experiencing perhaps the best and worse periods of economic activity and property valuations in living memory.
Therefore all eyes will be on the long-awaited review, planned for early 2016 and recently described as ‘radical’, as it will invariably have far reaching impact.
Having experienced the record-breaking recession that took hold around 2007, the boom period of the 80’s is like a dim and distant fantasy. Properties stood idle and countless millions of pounds were wiped from their values – but not their rateable values of course! During this period, it was not unheard of for owners to offer new tenants minimal initial rents – even completely rent-free periods for the first year or so – knowing that securing a tenant at any cost would relieve their own Business Rates burden.
And many more people believe these unchanged Business Rates are a major contributing factor in the decline of many High Streets, and the rising number of vacant shops.
But in Decembers Autumn Statement, chief secretary to the Treasury Danny Alexander said “The time has come for a radical review of this important tax. We want to ensure the Business Rates system is fair, efficient and effective,”
The Treasury claims it will look at how companies use their property, and consider how to modernise the system to better reflect changes in property values.
Many would agree this overhaul is long overdue. But in response to widespread criticism of the current system, Mr Alexander said “Lots and lots of people have views about how the Business Rates system doesn’t work, but as soon as you get into what an alternative system might look like there’s much less consensus.”
The UK still pays some of the highest rates in Europe. And the government has already postponed a revaluation scheduled for last year, so a lot could be riding on this ‘radical review’.
If you would like to know more about how the scheme will impact businesses, please read our Business Rates Bulletin for more details on the planned review.
You can contact our Stevenage branch on 01438 316655, or via email at email@example.com.