In recent weeks many businesses across all sectors have been surprised to find steep increases in their Business Rates from 2017 following the publication of the draft rating list by the Valuation Office Agency for England and Wales. In Scotland the draft valuations will not be published until December. (You can find and check your England and Wales valuations on the gov.uk website here.) The BHA has been actively working in England, Scotland and Wales to challenges these scale of the increases.
Business Rates – England
Since the news, the BHA, supported by our expert partners Gerald Eve, has joined other leading industry bodies in warning Government about the substantial challenge this presents to your businesses, especially considering other cost-pressures our industry is already having to respond to. Our objection will be included as a central point in our forthcoming submission to the Chancellor of the Exchequer ahead of his Autumn Financial Statement to the House of Commons on November 23rd. The BHA is also working as part of a coalition of business organisations to register our objection to proposals by Government to make Business Rates appeals more difficult.
Uniform Business Rate
Predictions on the Uniform Business Rate (UBR) and Transitional Relief were not expected until later this year. There has now been a notification from the Government that announces the UBR rate for England. This is the amount that rateable value is multiplied by to arrive at your liability, unless this amount rises or falls enough for transitional relief to ‘cap’ the change. In order to maintain the same income from business rates in real terms the lower rated businesses, referred to as ‘Small’ assessments, will see a reduced UBR of 46.7p, from 48.4p. A ‘Small’ assessment is defined as rateable value up to £28,000 in London and up to £20,000 for the rest of England. Above this threshold are ‘Large’ assessments, for which there will then be an addition of 1.3p, making a UBR for ‘Large’ rateable values of 48p. This compares with the current 49.7p for ‘Large’ rateable values. There will still be a supplement of 2p in London for Crossrail.
Check Challenge Appeal – Important information to be aware of
From 1 April 2017 the VOA will operate a new way to challenge your Rateable Value, called “Check, Challenge Appeal”. Beware - If you check a valuation on the VOA website any time after 1 April and then do not challenge the Rateable Value within four months, the valuation will be legally deemed as accepted. To Challenge the Rateable Value, you must include a detailed Statement of Case including facts and evidence. The VOA then have up to 14 months to advise whether they agree with you and only then do they have to advise their rationale. If you then wish to appeal the RV to the Local Valuation Tribunal then you have a short period to do so at a cost of £300.
Transitional Relief – Proposals under consideration
There is also an indication that Transitional Relief, the scheme through which larger increases and decreases are phased in, is likely to be reintroduced and that it will last for the 5 years of the next rating list. However, for the first time since 2000 the proposal is to introduce an extra band for determining the level of transitional relief each property will be offered. The 3 proposed transitional bands would be ‘Small’, ‘Medium, and ‘Large’, with the latter being £100,000 rateable value and above.
The Government has issued a consultation paper with two options on the level of transitional relief and the BHA will be responding to this. The Government’s preferred option is that properties in the ‘Large’ band for transitional purposes could see liability increases next year of up to 45%, whereas those whose bills that should be reducing significantly will have these capped at 4.1%. Rateable values in the ‘Medium’ band will still be ‘capped’ at +12.5% with decreases at 10%, whilst ‘Small’ assessments would be ‘capped’ at 5% with decreases at 20%. The Government’s preferred option is summarised in this table:
For full details of the consultation paper, along with the other transitional option being considered, visit https://www.gov.uk/government/consultations/business-rates-revaluation-2017. The consultation ends on 26 October.
Business Rates – Wales
In Wales, we are advised that the total rateable value change for all commercial properties is going to be a fall of 2.9%. For 2017/18 preliminary indications of intent from the Welsh Government are that the UBR will be 49.9p, up from 48.6p. There has been no formal announcement as yet, however our members in Wales have indicated there could be severe repercussions on job growth and retention and commercial sustainability if some of the rises that are being predicted materialise.
In September, Welsh Government announced the £98m Small Business Rate Relief (SBBR) scheme would be extended "permanently" though this only impacts on businesses with ‘Small’ assessments. The Welsh Government is consulting on a limited scheme of transition to assist ratepayers in receipt of Small Business Rate Relief (SBRR) on 31 March 2017. This will apply if they are experiencing a reduction in the percentage of SBRR they are entitled to on 1 April 2017, due to increases in their rateable value following the revaluation.
BHA Cymru is aware of the pressures on government revenue and has opened the conversation with Welsh Government to explore a third way to further encourage hotel support for the Government's Partnership for Growth strategy and enable the maximum uptake of improvements to the hotel stock. We request consideration of a new proposal, a whole new approach to public sector support of the hotel industry. We have proposed that a percentage of the Business Rates due to be paid by a hotel become available back to the hotel to incentivise key capital building structural improvements and the resultant job and commercial security this would encourage.
Business Rates – Scotland
In Scotland BHA is engaging with Ministers and the Scottish Assessors Association, in addition to participating in the Scottish Government initiated review of business rates currently underway.
The 2017 rates revaluation in Scotland is likely to lead to an increase in rateable values, and rates payable, by hotels of between 30-50%. BHA has challenged this with the Assessors and has made known to the Scottish Government its concern over the impact of this on the profitability and sustainability of hotel businesses. This dialogue continues with support from Gerald Eve and Montagu Evans. The Scottish Government has commissioned the Barclay Review of Business Rates. BHA has submitted evidence to the Review, which will not report until 2017. In addition the BHA made a submission to the Scottish Government concerning Transitional Relief with the effects of the 2017 revaluation and has co-signed a letter to the Finance Minister expressing concern over the doubling of the large business rates supplement. In past revaluations there has been a harmonisation of the small UBR with England, but there is no indication whether or not such a policy will continue for 2017/18.