Initial response to Business Rates announcements in the Autumn Statement

23 November 2016

David Parker, Head of Rating at Savills, responds to the announcement that the cap on transitional relief for businesses with business rates bills of over £100,000 will fall from 45% next year to 43%, and from 50% to 32% the year after:

“It’s disappointing that having proposed two options in the recent consultation paper to cap increases in rates liabilities for properties with a rateable value over £100,000 at either 33% or 45%, that the decision has been taken to simply shave a small amount from the higher of these figures. The concession is a negligible adjustment of a significantly onerous level of protection for businesses who are facing large increases in their rateable values.

“In addition, there is no assistance to those properties which have seen often substantial rateable value reductions, due more often than not to the fact that businesses are struggling in certain areas, yet the maximum reduction in rates payable that a larger property will see is around 2.5%. This is disappointing for those business which have waited an additional two years for their business rates to reflect the downturn in their areas, only to be told that the reductions will quite literally be drip fed to them.

“Clearly the only way that the transitional phasing system could have been more balanced would have been for it not to have been self-funding. Perhaps the introduction of an additional supplement to all businesses would have accelerated the recovery in the market in struggling areas, and offered some respite for businesses which are faced with substantial rates increases with less than six months notice.”

Worked examples from Savills:

• A business which is seeing its rateable value increase from £500,000 to £1,000,000 will see the increase in its annual rates drop from around £370,918 to £365,981 – a saving of just £4,937, and no saving in year two.

• A pub in Greater London which is seeing an increase from £100,000 to £200,000 rateable value will benefit by just £987 in year one and by £217 in year two – this means it will still see an increase in rates payable of £25,500 compared to the current level of liability.

 

 
 

General Enquiries

 

Key Contacts

David Parker

David Parker

Director
Rating

Savills Finsbury Circus House

+44 (0) 20 7409 8914

 

Edward Crabtree

Edward Crabtree

Business Development Manager
Rating

+44 (0) 207 409 8906