_Plight of large businesses facing Business Rates hike ignored by Chancellor

The Chancellor announced further measures to protect small businesses facing large increases in business rates as a result of the revaluation.

Keith Cooney March 08, 2017

Those who will no longer qualify for the relief in April will benefit from a cap of £600 pa.
Pubs with a rateable value of less than £ 100,000 will qualify for relief of £ 1,000 pa.
A central fund for Local Authorities of £ 300m will be set up to offer discretionary relief to hardship cases.

Although Knight Frank welcomes the proposed measures, the Chancellor has completely ignored those business which are facing shocking overnight increases of up to 42%.

Those businesses with a rateable value over £ 100,000 only account for 11% of the total of the entire amount of rating assessments, yet they pay a disproportionate 72 % of the £ 26 billion collected every year.

To ignore these important drivers of the economy and allow them to be burdened with such an overnight increase is irresponsible and may well push some into insolvency. The Chancellor also announced yet another review of the business rates system which is set to report before the next revaluation in 2022.

This has become a ground hog day event at every budget for the last five years. On every occasion, including today, the Government throws a spanner in the process by insisting they have to be revenue neutral which is ignoring the fundamental problem that Business Rates are now the largest property tax in Europe.

The reforms really need to be root and branch, starting with an acceptance that they cannot be revenue neutral. Instead, there should be an additional tax to which addresses the disparity between the brick and click businesses.

The Chancellor did announce a review of the online taxation policy and this should be combined with the business rates review.

The treatment of Local Authority State Schools should also form part of this review as it cannot be right that Councils have to pay full business rates and Free Schools get 80 % relief. This means the £216 million allocated to Councils for School repairs could actually end up been spent just on the increase in rates following the revaluation. An exemption should be introduced now.

Finally, It is disappointing that the Chancellor has ignored the Industries calls to stop the new proposed changes to the rating appeals system.

The regulations have not yet been passed and the system should be scraped as it is not fit for purpose. The changes proposed will make it almost impossible for the ratepayer to reduce an incorrect assessment, leaving them to pay excessive taxes.

Keith Cooney is Head of Business Rates at Knight Frank. Find out more about Knight Frank's Business Rates team and how we can help.