Local authorities to retain business rates
5 October 2015
James Thompson, head of business rates at Deloitte Real Estate, comments on the Chancellor’s announcement on the change in the business rates system with the abolition of the uniform business rates:
“This is a return to total local retention of rates and locally set poundages. In essence, winding the clock back to the pre “Poll Tax” system that was swept away in 1990. As always, the devil will be in the detail as the current legal framework is designed for a national tax and is unsuitable for a local one. This is particularly relevant for central rating lists and properties that cross council boundaries.
“One important check and balance that used to exist pre 1990 was the link to domestic rates paid by voters. Very few business ratepayers have a vote, so the temptation may now be for the most cash-strapped councils to increase the business rates. This could trigger a downward spiral if it drives out business and drives down values.
“There will be some very big winners and losers here unless there is some equalisation mechanism put in place. For example, the City of London and Westminster currently collect far more rates than they receive back from government. These boroughs will be able to cut their rates, whilst some councils currently that receive far more than they collect could be forced to increase rates substantially.”
Notes to editors
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