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Business Rates - still a political hot potato

The issue of business rates has always been a political hot potato and never has the issue been in the news so much as it has in the past year says commercial property agent Prop-Search.

The decision to postpone the 2015 Rate Revaluation affected a lot of businesses but was particularly harsh on some High Street retailers and the Government came in for a lot of criticism.  This may explain the ‘Retail Business Rates Relief Scheme’ that was announced in the Chancellor’s Autumn Statement.

It was then announced that all retail properties with Rateable Values of £50,000 or less would benefit from a discount of £1,000 per annum for the two rates years 2014/2015 and 2015/2016.  Those occupiers with multiple outlets will also enjoy relief for each of their properties that met this criteria.  Occupation of a property for part of a rate year will also attract proportional relief.

Samantha Jones, a Surveyor at Prop-Search, said: “A retail property is one that is defined predominately for the sale of goods to visiting members of the public and includes charity shops, hair and beauty salons, travel agencies, dry cleaners, tool hire, furniture and carpet shops, opticians and post offices to name just a few.”

She added: “Properties used for the sale of food and/or drink are also included such as restaurants, coffee shops, take-away outlets, and pubs and bars.  However, the relief will not extend to A2 retail users such as banks, estate agencies, employment offices, pawnbrokers, betting shops or surgeries.”

Although this is a discretionary relief as it is wholly funded by the Government, it is hoped that the Northamptonshire local authorities will provide the necessary relief.  It should also be remembered that businesses must apply for the relief for each qualifying property.

The Government also recognised that further relief needs to be given to High Streets and announced a new reoccupation relief to encourage use of vacant town centre shops.  Where a retail property, which has been vacant for more than 12 months is reoccupied, on or after 01 April 2014 and on or before 31 March 2016, 50 per centre rate relief will be granted for 18 months.

Finally, business rates can now be paid in 12 instalments rather than the previous ten - but again this facility has to be applied for.

Samantha Jones concludes: “Government plans to reform business rates could see rateable values calculated more frequently instead of every five years.  It has now published its ‘terms of reference’ for the review of business rates and said it intended to be more responsive to changes in property values and to make the system more simple and transparent for ratepayers.”

The review will consider changes to valuation methods constant with the principle that business rates are based on rental property values and that the rate retention system rewards local government for growth in values.  It will also evaluate the frequency of revaluations to enable tax assessments to be based on up-to-date property values, the circumstances under which liability can be backdated.  And the administration of billing and collection by local authorities, including the application of reliefs and exemptions; and of valuation by the Valuation Office Agency, including the scope for improvements in communication and the exchange of information between ratepayers and public bodies.

The British Retail Consortium has said that it would like to see business rates based on energy usage or the number of employees.  Another idea suggested is linking rates to the percentage of corporation tax paid by a retailer.

Prop-Search predicts that the lobbying of Government will continue until this potato is ready to be served.

Further information or advice can be obtained from Prop-Search - Tel: 01933 223300 / 01604 492000 or its website:

Wednesday, June 25, 2014