Government to review business rates system
The review will examine the “complete structure” of the system, which has been in place since 1988. However, the outcome is expected to be fiscally neutral meaning that the total sum collected from businesses will not change.
The current system has been criticised for leading to big discrepancies in bills. Companies with similar turnovers can pay wildly different sums for business rates because their properties have varying “rateable values” depending on the size and more importantly the location of their premises. Helen Dickinson, head of the British Retail Consortium, said: “We want a system that brings investment and jobs to the High Street without punishing retailers who trade online because rates are so expensive.”
For the time being the chancellor announced that a discount for retailers with properties that have a rateable value of less than £50,000 would be increased by £500 to £1,500 next year. The rise will bring the total relief on business rates to £1bn and help some 500,000 companies. The cap on increases in business rates will remain pegged at 2%.
The rates paid by English businesses are the highest of any European Union country and can be a company’s biggest expense after wages and rent. Rates have been blamed for the decline of many high streets and the rising number of vacant shops.
Business rates are calculated according to the rateable value of the property a company uses. The valuations are still based on property prices in 2008, before the economic downturn took its toll on commercial real estate, as the government postponed a revaluation scheduled for last year.
Fenn Wright provides a number of commercial property services. If you would like any advice regarding your business rates assessment then please get in touch with Gavin Keats in Ipswich, Lewis Chambers in Colchester or Roger Hayward in Chelmsford.