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Tax reversal supports small businesses

By Tom Drake

Partner

Drake Commercial

THE government has recently announced that it will begin the process to reverse the so called ‘staircase tax’ in order to ease pressure on smaller sized businesses.

Draft legislation has been published setting out a reverse to the tax which has been reported will benefit up to 1,000 UK firms.

The staircase tax applies to businesses that occupy more than one adjoining floor, connected by a communal staircase, where business rates had been calculated as if the floors were separate properties. For smaller firms that might qualify for small business rates relief, this has prevented them from claiming relief, as they are technically classed as occupying more than one property.

A Supreme Court ruling in August last year had meant that many of these companies faced large backdated business rates bills, but the new government legislation means this liability could now be written off. The new legislation will allow firms to decide whether or not to be assessed as a single occupancy and any savings as a result will be backdated.

Business rates thresholds were revised last year in an apparent attempt to support small businesses. Under the new legislation, commercial properties with a rateable value of up to £12,000 are exempt from paying business rates. Rateable values of between £12,000 and£15,000 provide tapered relief and a slightly reduced multiplier, currently 0.466 pence in the pound, will apply to properties up to £51,000. The full multiplier will apply to properties above this level.

On the face of it, the above should assist smaller businesses but the staircase tax and the complicated appeal process has made it more difficult for companies than it needs to be. The change in government legislation has at least recognised part of this, although business rates appeals remain a complicated process.

If you need to discuss or review your business rates, Drake Commercial can be contacted on 01604 620616 or email

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