Business rates latest 5th December 2012

Chancellor George Osborne today said in the government’s Autumn Statement that it will extend the temporary doubling of the Small Business Rate Relief scheme for a further 12 months from 1 April 2013. Over half a million small businesses will benefit from this extension, with 350,000 not paying any business rates until April 2014.

Jerry Schurder head of rating at Gerald Eve welcomed the Chancellor’s announcements in relation to business rates but said that the Government should have gone far further. Schurder said: “Whilst the extension for a further year of the enhanced small business rate relief scheme is welcome, providing assistance for around 500,000 small firms, it is unhelpful that businesses cannot plan ahead with certainty as to their future liabilities.

“This is the fourth time that the relief has been extended for a short temporary period. It is ironic that the Government’s rationale for postponing the 2015 rating revaluation was to provide budgeting certainty for businesses, yet for SMEs it is only providing one year’s certainty. “Exempting eligible small businesses with assessments below RV £6000 from any rates liability costs relatively little and the Chancellor should have taken them out of liability permanently or at least for the life of this Parliament.”

Robert Murdoch, partner and head of rating at Deloitte, commented: “In the current economic climate any relief that can be given to small business has to be welcome. Business rates are a regressive tax in that they do not take into account the ratepayer's ability to pay. “At present rates bills are based on rental values which were set at the peak of the market. The Government has announced that they intend to postpone the next revaluation which had it gone ahead would have seen a redistribution of the rates levied to reflect the market conditions and at least given a semblance of trying to ally bills with ability to pay. “The other feature of rates bills is that they increase annually by RPI whereas all other Index Linked elements of Government finance are CPI adjusted. “As a result of both the postponement of the revaluation and the RPI inflator, in many instances, business rates now exceed the rents on lots of commercial properties. This is unsustainable.”

Don Baker, Chairman of Rating at CVS, said: “We welcome the Chancellor’s announcement to exempt newly-built commercial property from empty property rates. That’s one step in the right direction. “However, by failing to lower high business rates bills the Government has missed an opportunity to help the vast majority British firms to beat the recession. The Government needs to look again at the business rates appeals system to reduce the 240,000 backlogged appeals and help firms lower their bills swiftly and with confidence. These businesses need their over-paid money returned to them now, so the Chancellor has missed a trick by resourcing HMRC to target tax evaders but not resourcing the Valuation Office to clear the rates bill backlog. “The current system is simply too slow and bureaucratic. Improving it would provide a lifeline for many SME firms who don’t qualify for Small Business Rate Relief, and would cost the Exchequer very little. The Government is committed to reducing bureaucracy elsewhere and needs to do the same with business rates.”