The Government’s two-year deferment of the business rates revaluation will cost businesses in Bristol and the South West an additional £220 million, according to new research.
The comprehensive review by leading commercial property advisor Bilfinger GVA calculates what the 2015 revaluation would have looked like if it had taken place when it was originally due on 1 April 2015 and compares this to what businesses will instead have to pay over the course of the deferment.
The findings suggest that over the same period, the deferment will cost businesses in the South West, while London businesses will actually benefit by more than £1.5billion.
Current rating liabilities are valued against the backdrop of the market in April 2008, just before the onset of the economic downturn, a level that large swathes of the market in the South West are still yet to return to. As a result the current rating system has become badly disconnected from the economic landscape, and left business crying out for changes to create a fairer system.
The Bilfinger GVA review, entitled April Fools’: The rating revaluation that never was, contains a number of key findings and recommendations, including:
– The deferment of the 2015 revaluation will cost business in the South West £220 million, while saving London £1.5bn.
– The 2015 Uniform Business Rate (UBR) would have been 54.5p, with RPI increases taking it beyond the unchartered 60p barrier by year five of the valuation cycle.
– Bilfinger GVA forecasts that the 2017 revaluation UBR will rise to 51.2p, with rateable values (RV) 3% lower across England compared to 2010. First time for 22 years that the multiplier will not fall because of the revaluation.
– A 7.5% increase in London’s RV and higher UBR will cost London an additional £1.1bn in 2017-18.
– Scrap downward transition for hard hit businesses from 2017 so they receive the immediate benefit from the 2017 revaluation.
– A lid must be kept on business rates, which represents the highest rate of any major tax. The Government must change from RPI to CPI-linked uplifts to stop the inexorable rise of this tax base.
Andrew Wellens, Director in Bilfinger GVA’s Business Rates team in Bristol, says: “The Government has responded to growing calls across the business community for what it terms a ‘root and branch’ reform of the business rates system.
However, it is important to remember that the Government is committed for any changes to be fiscally neutral, so any major reforms to the system will still create winners and losers.
“They are very much responsible for much of the controversy over the current system for delaying the revaluation from 2015 to 2017. Our research clearly highlights the regions and sectors that have paid the highest price for the delay.
“By switching to a CPI-linked system, committing to more frequent valuations and scrapping downward transition from 2017 for those businesses that have been hardest hit, any future Government could make huge strides towards redressing the imbalances in the system, and reducing an increasingly disproportion burden on growth and job-creating enterprise.”
