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News & opinion

2 NOV 2018

Budget 2018: English Business Rates barely workable

Tamara Hooper RICS

Tamara Hooper

Policy Manager

London, UK

RICS

RICS welcomes the announcement of a reduction in rates for those with a rateable income of £51,000 or less by a third until the new ratings list in 2021, with the reduction staring next year in 2019.

It should go some way to helping to ease the burden of small businesses, but again the Government has only looked to a quick fix solution aimed at the publicly struggling high street, yet the focus on retail premises negates that traditional high streets, together with other shopping locations form a relatively small part of the total non-domestic stock. This announcement aimed at small business also does not account for the large retailers where majority of retail staff work and whom are currently in the most trouble, and who also play a vital role in attracting customers to our high streets and shopping centres.

Their announcement of removing lavatories from the rating list, is also welcome, but with a highly complex system that also see properties facing bills for things such as cash machines, the business rates system needs more to unclog the pipes than relief in lavatories. 
In 1990, when the present system was introduced, there were no rates supplements and three possible rate reliefs. Now there are around four possible rates supplements and at least thirteen possible rate reliefs, as well as potential Business Improvement District (BID) rates levies. The reliefs and supplements have grown in a piecemeal fashion and sometimes conflict one with another, particularly for smaller businesses. Even experienced professionals at times struggle to understand the system. 

Added in to the complexity of possible reliefs from rates is that England’s non-domestic rates are some of the highest in the OECD, effectively a tax at 50%, and are one of the biggest costs businesses need to factor in, for this reason, business rates liabilities will always be subject to scrutiny and grievance.

The current state of business rates and the high cost of the 2017 list was due to a political decision to not revalue properties for seven years. Had ratings been done more regularly, the industry would not have seen the large increases it did, and business owners of all sizes would not have the large price increase difference they are currently experiencing. Coupled with the long period between ratings is the political decision to implement an unpopular appeals system that according to Government’s own data has a dissatisfaction rating of over 80%.

RICS has repeatedly called on the Government to do a complete ‘root and branch’ review of the current business rates system that is arms-length from Government and includes reliefs, frequency and the appeals system and assure businesses and industry that they will actively listen to their voices on this issue. With the lack of focus in Budget 2018 on the actual problems of the business rates system we believe it a lost opportunity to genuinely change the system ahead of the new valuations to be done in 2020 for 2021.

Government is giving short sighted quick fixes to a system that they messed up for the long term, instead of looking to fix for the long term the rate which properties taxed, the transparency in which information is shared and the ability for those who believe they paid too much to appeal a decision, which would truly make the UK a great place to do business and thrive commercially.

Tamara Hooper RICS

Tamara Hooper

Policy Manager

London, UK

RICS

Tamara is our Policy Manager. She is based in London and works within the UK External Affairs team.

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