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Business rates to rocket

Businesses are about to face the biggest annual jump in business rates for over 20 years says commercial property agent Prop-Search.

The Government has forged ahead with using September's 5.6% increase in the Retail Price Index (RPI) to set the Uniform Business Rate (UBR) multiplier to be used from April 2012. The UBR multiplier, which is presently set at 42.6 pence before supplements, will now increase to 45.0 pence – a rise of 5.6%. This is much higher than expected and higher than most occupiers would have allowed for in their 2012/13 budget plans.

Chris Billson, a Director at Prop-Search, says: “At a time when many businesses and retailers are struggling, this rise in the UBR level could have a negative effect across every sector of the economy, particularly with the 2010 Rateable Values having been based on rental levels that were set, at, or near the peak, of the property market in 2008.”

Since 1990, successive Governments have linked the UBR to the previous September's RPI inflation figure even though the legislation permits the adoption of a lesser figure. It had been hoped that this Government, following lobbying by many high profile businesses and property organisations, would recant on this. However, the Chancellor's Autumn Statement remained silent on the UBR.

Instead, an announcement was made that businesses will be able to defer 60% of the increase in their 2012/13 liability and repay that deferred amount in 2013/14 and 2014/15. If the 2012/13 scheme operates in the same way as the 2009/10 arrangements, then the deferrable amount will calculated as 3% of the full 2012/13 liability. The 3% so deferred will be repaid in the subsequent years; 1.5% in 2013/14 and 1.5% in 2014/15.

Chris Billson adds: “Whilst liability for the full rates increase clearly remains, deferment does bring modest cash flow benefits. However, the 2009/10 scheme is not remembered fondly for a number of reasons; businesses had to make individual written applications to each Authority if they wished to defer liability, and some Local Authority's procedures and processes were unnecessarily cumbersome.”

At the end of last year, the Chancellor reported following the Local Government Resource Review, but unfortunately this Statement was silent about empty rates and the lobbying for a review of this has once again fallen on deaf ears. As a consequence, empty rates will continue to be charged in 2012/13 for premises with Rateable Values above £2,600.


Friday, March 30, 2012