Government to postpone Business Rates review until 2017

The Government has announced its intention to postpone the next business rates revaluation by 2 years from 2015 to 2017.   The required bill was laid down before parliament on 18th October.

After staff costs and rent, business rates are the 3rd biggest outgoing for many local businesses.   The government has decided to do this in order to provide certainty for businesses going forward and to provide certainty for government tax revenues where the amount of business rates payable increases in line with inflation.

Richard Pullen, Director of Pullen Associates, belives that this will not be good for local businesses.   Companies will continue to have to pay business rates linked to property values as at 2008.   Had the revaluation gone ahead with effect from 2015, then business rates would have been linked to commercial rents as at 2013. 

Rents have gone down since 2008 whilst as a proportion of total establishment costs, the amount of business rates payable has increased, in some cases significantly.   The revaluation should have gone ahead to enable business rates to be readjusted downwards in line with todays economic situation. 

Clearly the government has to balance its books, however home-owners have been granted a council tax freeze, whilst the UK's businesses will have been unfairly targeted for additional tax revenue through business rates.

Some properties are prooving hard to attract tenants.  Had the revaluation gone ahead, this would have helped to ensure that the total occupational costs of business premises are put back into proportion.   It should be borne in mind that the government will always receive revenue from business rates as the poor old landlord still has to pay even if the property is empty.  

Richard Pullen also feels sorry for those government valuers in the Valuation Office.   "There is already a large back-log of rating appeals under the current 2010 rating list and many believe that this annoucement is in response to the fact that Valuation Office valuers are concentrating on these appeals and therefore are unable to also deal with the introduction of a new rating list.  The trouble is that by the time the government get around to introducing a new rating list we will have had a period of 7 years under the old rating list during a time of significant economic change.   Had the government invested in introducing a new rating list this would have assisted businesses.   The fact that there is a backlog of appeals demonstrates that business are not happy with the current rating list, the life of which is now being extended".