The revaluation of business rates is currently a hot topic. Simon Massey, Partner and Head of Commercial Real Estate at leading regional law firm Tollers, considers the commercial impact.
BUSINESS rates, in effect the commercial version of council tax, are paid on the rental value of the space that businesses occupy with the amount payable dependent on the size of the property and its uses.
A review is usually held every five years but the 2015 revaluation was postponed until 1 April 2017 because the Government wished to avoid sharp changes to business rates. The likelihood of significant adjustments is arguably inevitable, however, due to the price fluctuations in properties since 2008.
From 1 April 2017, the property value threshold for a small business is increasing which means that a small business with a rateable value of £12,000 or less will receive 100 per cent business rates relief. For those businesses that own properties with a rateable value between £12,001 and £15,000, they will receive tapered relief.
Secondly, the threshold to which the standard business-rate multiplier now applies to a rateable value of up to £51,000. This means that more businesses will be eligible for the Small Business Rate Relief (SBRR).
What the business rates changes mean
For most there will be a positive impact with approximately 600,000 UK businesses falling within the small business category. It is estimated, therefore, that business rates liability will fall for over a quarter of a million businesses.
There are, however, plenty of businesses who will be detrimentally affected. After the Supreme Court ruling in Mazars vs Woolway, it is now appropriate to treat different areas of the same building as separate premises. It appears that previously a whole building could have been classed as just one rateable area but now, under the new assessment regime, a separate rates levy could be raised for each individual floor/area.
For example, if a company occupies floors two and four of a four-storey building they can now expect to receive two separate demands for business rates while the SBRR will only apply to one floor. Since the revaluation is to be applied from 2015, this means there may be a two-year backlog of additional payments with deficit demands usually becoming payable within 14 days.
If you have concerns about the changes to the business rates, talk to Tollers on 01604 258558 or visit the website www.tollers.co.uk
