The Government has announced that it intends to postpone the revaluation of business rates by two years from 2015 to 2017.
The next scheduled revaluation planned for 2015 would have set business rates at 2013 rental values. Under the Government’s proposals, the 2017 update will be calculated at 2015 rental values, which are forecast to be higher than 2013.
Stuart Mitchell, Director at Holloway Iliffe & Mitchell commented: “Firms will continue to pay business rates based on rents agreed at the height of the market in 2008 for a further two years.”
The British Property Federation argues that a 2015 revaluation is necessary to enable business rates to be “readjusted downwards in line with today’s economic situation”.
The Government already faces a difficult balance between the plan for deficit reduction and the protection of small businesses across the country, when many are struggling in the current economic climate. Both Labour and the Coalition Government have continued however to link the Uniform Business Rate to the previous September’s inflation figure since 1990 even though legislation allows the use of a lower figure.
Only on Tuesday this week shop keepers discovered that they would have to deal with a £175m business rates increase in April 2013 as the RPI measure of inflation rose 2.6% in September.
Craig Powell, Associate Director at Holloway Iliffe & Mitchell said “While homeowners are again benefitting from a further council tax freeze and the Government have chosen to use the lower Consumer Price Index (CPI) as opposed to the RPI figure when setting welfare payments, many businesses are feeling that they are being unfairly targeted for additional tax revenue and the news today provides additional weight to this argument.”
Parliamentary under secretary of state for communities and local government, Brandon Lewis, claimed the decision avoids “local firms and local shops facing unexpected hikes in their business rate bills over the next five years”.
He added: “As business rates are linked to inflation, there will be no real terms increase in rates over this period. This reform will provide certainty for business to plan and invest, supporting local economic growth.”
