As predicted, Chancellor George Osborne has announced that the rise in business rates bills from 01 April next year will be capped at 2% instead of being linked to RPI inflation at 3.2%. In addition Mr Osborne has decided to grant a flat rate discount of £1,000 to retail businesses with rateable values of less than £50,000. The decision, in response to industry groups lobbying on behalf of rate payers who are being increasingly hit by the burden of rates, will prove too little too late.
Richard Wackett, National Head of Rating at Lambert Smith Hampton (LSH), said: “The Government has missed the opportunity to reform the outdated business rates system, which would reduce the Government’s administration burden, allow them to settle appeals more efficiently and remove artificial barriers to further development and growth. The proposed measures will complicate an already complex regime and avoids addressing the more fundamental reform required by business occupiers.”
“This is unlikely to make a significant difference to the viability of the business and much more radical changes to the rating system are required if they are to have any real impact on rates bills that are perceived by many to be crippling both industry and the High Street.”
Richard added: “The Chancellor should have made the most of the fragile, but real, signs of recovery by relieving business of punitive and increasingly regressive taxes on commercial buildings. There are a series of small measures designed to assist business, although these are minor including a promise to clear all outstanding 2010 rating appeals by July 2015, the spreading of rate payments, the extension of small business relief and an important acknowledgement that the market needs a ‘kick start’ through a 50% new occupation relief for previously vacant commercial and industrial premises.”
LSH’s five point plan will make business rates easier to manage, lower government administration burden and help small businesses to plan:
1. Reverse the decision to delay the revaluation until 2017: This will bring valuations up to date and rebalance the business rates burden to reflect today’s economy, not the economy of 2008.
2. Introduce annual rolling revaluations: The technology exists to enable annual rolling revaluations, thereby de-mystifying the process for many occupiers and allowing rateable values to keep pace with changes in the economy.
3. Rating self-assessment: Empower businesses to assess their own Rateable Values, subject to Valuation Office appeal, statutory deadlines and remedies for failure to comply.
4. Abolish empty rate charges: They inhibit new development and the tax take is lower than the potential upside in other areas of the economy, such as construction and new development.
5. Create a flat small business rate: A low flat rate tax for small businesses, similar to the VAT flat rate scheme, would remove the need to assess small properties for rating and facilitate significant reductions in government administration costs.