Where next for business rates?
Business rates are based on 2008 valuations, before the financial crisis had fully hit and when the cost of renting a shop or an office was often higher than now. Some business groups have complained for some time that the rates system discourages investment and needs modernising.
The BRC has recently produced a report, in collaboration with the accountants Ernst and Young, that says the current system is “outdated and cumbersome”. Their suggestions for a new rating system include valuations based on turnover, energy usage or job creation.
The government is preparing a discussion document on the subject for publication in the spring and a comment from the Treasury in response to the BRC’s proposed plan is reported as: “At the Autumn Statement 2013, the government announced over £1bn of business rates support, which will benefit all 1.8 million ratepayers. We welcome the BRC’s contribution to the discussion and will consider their options on administrative reform as part of our review.”
Fenn Wright Commercial Surveyor, Mark Drummond remarked: “Business rates are the third largest outgoing for most businesses after staff and rent costs and the current system is clearly outdated. The rise in internet use, particularly for shopping, and other changes in business behaviour mean the current method of assessing rates is no longer appropriate. In the short term any revaluation should be brought forward so rating valuations take account of the decline in market rents that the majority of the country has experienced. And in the long term, a wider review of the business rate system would hopefully produce a fairer way of taxing commercial property.”
For specific advice relating to your commercial property please get in touch with your local Fenn Wright Commercial team.