Posted 20 November, 2012 OBI BLOG
Last week I delivered a lecture to students at the University of Salford based around the subject of Business Rates. I’ve delivered similar lectures previously and they are normally relatively straightforward. However, this time around I had to change the lecture to allow for the recent revelation from the Government that it will postpone the revaluation of business rates from 2015 to 2017.
Trying to explain to the audience why this amendment has been introduced was difficult, especially whilst trying to stay factual and impartial. The Government argue that the decision has been taken in order to avoid local firms and shops facing unexpected hikes in their business rates bills over the next five years.
The last revaluation was undertaken based on rental values of April 2008 which were due to be revalued in April 2013. The postponement means that companies will have to pay rates based on property rents in 2008 – close to the peak of the market – until 2017.
Sceptics claim that if next year’s business rates revaluation was to go ahead as planned, “new rates would come into force in April 2015, a month away from the General Election. This would undoubtedly show increases in business rates in the south east and a significant decrease, to reflect the readjustment in property values, across the north and elsewhere. This is not the kind of news the Government want to present to heartland supporters a month away from elections.” – Simon Danczuk, Labour MP for Rochdale.
The revaluation reflects the market and any increase or decrease in property values due to market conditions should be directly reflected in the rates recalculation and therefore the rates payable by companies operating in more difficult markets. The same companies have struggled with the revaluation in 2008 and therefore in turn should benefit from the change in market conditions over the last 5 years.
It is currently estimated that Manchester businesses will face extra payments of £35m.