Positive steps to reducing Business Rate bills in England

Will Wales and Scotland follow suit?

22 March 2016

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Small Business Rate Relief, which was previously only available to firms with a rateable value of less than £6,000 under a scheme reviewed annually, was doubled to £12,000 on a permanent basis in the March Budget. This removes small businesses in England from business rates completely and means they no longer have to wait to see if the small business rate relief scheme would be renewed at the start of each financial year. The Chancellor also extended the tapered relief for properties between £12,000 and £15,000 RV, and from 1 April 2020, business rates will be linked to the level of inflation reflected by the Consumer Price Index (CPI) rather than the Retail Price Index (RPI). Andrew West, Director of Rating at Cooke & Arkwright, has been making representations to the Westminster Government for many years as part of the RICS Rating and Local Taxation Policy Group, and welcomed the announcements which to a degree reflected the list of demands.

Andrew comments, “Smaller businesses in England have welcomed the news as it gives them more certainty. However, it would have been desirable if the Chancellor had permanently exempted all businesses with a rateable value up to £15,000. These smaller properties contribute little to the revenue, but put a demand on resources in administration, including the appeals process. He also announced the move to link the multiplier to CPI rather than RPI, which will help reduce business rate bill rises - albeit the difference is relatively small. The link to RPI created hardship for many businesses during the recession when rates were rising at up to 5.6% per annum. Ideally the multiplier should be frozen or even reduced during a recession.

“There was also a commitment to introduce more frequent (at least three yearly) revaluations to help correct movements in property values and maintain a fairer tax base.  We have been asking for more frequent revaluations, so this is good news. In the longer term we would even like to see them move to an annual basis.

“There were missed opportunities such as reducing rate liabilities for larger businesses, maybe by exempting or part-exempting plant and machinery from valuations, as perversely, businesses investing in new equipment may see their rates rise. We’ve also asked for more transparency in the rating system, as many appeals are currently made because the ratepayer does not understand whether the assessment is correct and the only way to establish this is via the appeal process. A new system called ‘Check, Challenge, Appeal’ proposed by the DCLG will actually reduce transparency in the system, so I will be making further representations on this.

“The overall positive impact of the measures announced in the Budget would have been most welcome during the recessionary years, particularly on Britain’s high streets which bore so much of the brunt. However, these are now steps in the right direction. It remains to be seen whether the devolved administrations in Wales and Scotland will follow the lead of the UK Government.”