April 1st - a serious date for business ratepayers
31 March 2015
April 1st 2015 is a significant date for UK ratepayers as three major events coincide.
In England, new regulations come into force limiting the backdating of rating appeals to the beginning of the rate year in which it was made.
James Thompson, head of business rates at Deloitte Real Estate, comments: “The playing field has been tilted against the ratepayer for the last 10 years with the Valuation Office able to alter assessments for historic changes. However, the ratepayer is only able to appeal based on their current circumstances. With these restrictions on backdating, the government has now built a fence across the playing field to stop the ratepayer climbing the slope. I suspect that these changes have been brought in to limit the exposure of local councils to back dated rates refunds. This impacts on their current year’s revenues due to the rates retention scheme introduced in 2013 and extended in the recent Budget. These changes are likely to lead to more appeals being lodged as businesses seek to protect their position each year contrary to the government’s intention to reduce the volume of rating appeals.”
In England, Scotland and Wales April 1st 2015 also marks the Antecedent Valuation Date (AVD) for the 2017 Rating Revaluation. This date is when rental levels are taken, and will determine the rateable values for the five years from 2017.
Thompson explains: “The revaluation will be based on the physical situation on 1st April 2017. However, relevant valuation factors such as value, costs and profits will be taken at today’s values.
“Large swings in rates liabilities are expected to have big falls in value since 2008 with large areas of the country, particularly in retail and industrial property, with a few isolated pockets having retained or increased their value. Some other sectors will have seen a net increase in values over the same period. Central London offices, for example, have recovered strongly from the recession and are generally significantly above their 2008 levels.”
Thompson continues: “Unfortunately for a ratepayer looking at their much reduced rental value and hoping for a similar reduction in their rates bill, things may not be that simple for two reasons. In England, the multiplier or ‘rate in the pound’ will be set to maintain the inflation adjusted level of business rate revenue. If the overall total rateable value in the country falls, after the government has made a generous allowance for reductions on appeal, then the multiplier will rise ahead of inflation to compensate. Some ratepayers with reduced rateable values may still see an increased rates burden.
“Ratepayers in England can expect the benefits of any falls in liability and the costs of larger increases to be restricted initially by a transitional relief scheme. In the last five revaluations, reductions have been phased in to fund a scheme to cushion the impact of increases. Wales and Scotland chose not to implement such a scheme in 2010 but still have the powers to do so if they wish.”
In Northern Ireland the new rateable values for 2015 non-domestic revaluation – their first since 2003 following the postponement and then cancellation of their 2010 revaluation, come into force alongside local council’s re-organisations. This will lead to significant swings in rate liability. Even in the retail sector some properties have seen a doubling of their values whilst others have halved.
Notes to editors
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