The Government’s two-year deferment of the business rates revaluation will cost businesses in the North West a staggering £682 million, according to new research by Bilfinger GVA.
The comprehensive review by the leading commercial property advisor 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.
Had the revaluation not been postponed, the Total Rateable Values in the region would have fallen from £6,682 million to £5,270 million, a fall of 21 per cent. The impact of this on North West ratepayers is that an estimated easing of the total business rates collected in the region of approximately £682 million, will not occur.
The findings also suggest that over the same period London businesses will actually benefit by more than £1.5bn. However London businesses can therefore expect to be hit very hard when the deferred revaluation is carried out in 2017.
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 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 Total Rateable Values in the North West would have fallen from £6,682 million to £5,270 million, a fall of 21 per cent.
– The deferment of the 2015 revaluation will cost business in the North of England and Midlands £2.3 billion, 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.
Duncan Harkness, Senior Director in Bilfinger GVA Manchester Business Rates team, said: “The research piece by Bilfinger GVA shows the harsh reality of the implications for North West ratepayers of the Government’s decision to postpone the 2015 rating revaluation for two years.
“While businesses in the South East, which should have seen significant increases in rates bills, have been cushioned from these increases, the cost of this subsidy has been borne by ratepayers in the regions. The North West occupiers have been hit hardest, having to subsidise more affluent areas to the tune of an estimated £682 million pounds over the next two years.”
