The government has unexpectedly announced its intention to postpone the 2015 business rates revaluation in England to 2017.
In the ministerial statement accompanying the announcement it was stated that the decision ‘will avoid local firms and local shops facing unexpected hikes in their business rates bills over the next five years.’
Malcolm Barber, from Jones Lang LaSalle’s Southampton office said: This statement is completely misleading as preliminary research from Jones Lang LaSalle suggests that ‘local firms’ and ‘local shops’ were likely to be the major beneficiaries of the next rating revaluation as their rents will have fallen further in relative terms than the average falls experienced across the wider economy”.
Given that the Valuation Office Agency had already started work on preparing for the 2015 rating revaluation the government would be aware of the initial findings which would be that a significant proportion of businesses in England would see a fall in their rateable values.
A revaluation simply redistributes the existing rate pool (the result of multiplying the total rateable value by the multiplier less any reliefs) based on more recent market rents.
Based on the antecedent valuation date of 01 April 2013 the total rateable value base is expected to have fallen significantly resulting in an increase in the rate multiplier to ensure a stable rate pool.
The consequence of ratepayers seeing large falls in their rateable values but still seeing a rise in their rate liability is perceived to be the real reason for the government’s announcement.
The result will be two more years of hardship for the very businesses that should have benefitted from the revaluation process particularly those in our beleaguered high streets and the ‘local firms and shops’ referred to in the ministerial statement.
It will be interesting to see if the same disingenuous reasons are given by the Scottish and Welsh assemblies should they choose to follow England and abandon the revaluation process too.
