Business Rates Revaluation
Business rates are taxes paid by occupiers or owners of any property that is not classed as domestic. They are calculated by multiplying the rateable value of the property (based on the annual rent) by the relevant multiplier (calculated using a formula set out in the Local Government Finance Act 1988). The next revaluation of business rates is due to take effect on 1 April 2010 based on 2008 values. This means that the revaluation is based on property values that could be significantly higher than at present, although the multiplier will fall to adjust this slightly (it is estimated that the small business multiplier for 2010-2011 will be 41.3 pence adjusted in relation to the RPI index). The new rates are available in draft and rate payers should be notified of the new rates this month by the Valuation Office Agency.
Changes in rates are implemented via transitional arrangements to provide time for rates payers to adjust to increases in bills and the Department for Communities and Local Government has published a consultation paper inviting comments on how to introduce these arrangements for the 2010 rating list. The aim is that the rating list is self financing and the transitional arrangements are therefore effectively funded by other rate payers.
The government favours annual caps on increases and reductions on individual rate bills over the next five years. These caps would differ depending on the size of the property. The idea is to spread the transition over the full five year period of the rating list (revaluations occur every five years) to avoid any sharp increases any one year. The government also believe it would be fairer than merely capping increases over the five year period as otherwise all other rate payers would have to pay a supplement on their rates bills, regardless of how their own bill has fared as a result of the revaluation. The other two options being proposed are to take the above scenarios but spread them both over four years
New thresholds are proposed for those small properties with assessments of under £25,000 in London and £18,000 in the rest of the country and to fund this small business rate relief scheme, an additional amount will be added to the multiplier. This has not yet been estimated but for the previous two years it has been 0.4 pence.
If you think the rate revaluation for your property is excessive contact Martin Ackland from the commercial property team on 020 7674 0564 or by email at martinackland@cumberlandellis.com
