Business Rates
One of the biggest costs facing any occupier of a commericial property is business rates. The amount of rates that a company pays depends on the level of the Rateablve Value of their premises, which is set by the Valuation Office Agency (VOA) in England and Wales or the Assessors Department in Scotland. The Rateable Vaule of any property is simply an estimate of the rental value of that property at a particular moment in time. Under the current 2005 Rating List, Rateable Values reflect estimated rental values as at 1st April 2003.
The 2010 Rating Revaluation
However, a new Rating List comes into force on 1st April 2010 and its aim is to redistribute the rates liability burden according to the shift in property values since the previous Rating List. All properties will be assigned new Rateable Values based on rental values and economic circumstances as they were two years earlier, on 1st April 2008.
Unfortunately, this Antecedent Valuation Date corresponds with peak of the UK property market and as a result the total of all Rateable Values is expected to increase by about 19%, although there will be wide variations across different sectors and in different geographical areas of the property market. Undoubtedly though, office occupiers in Central London are likely to experience the largest increase in rates liability.
The VOA has now completed its valuations for the 2010 Rating List but these valuations will not be available until the VOA publishes the new Rating List in draft form in the Autumn of 2009.
The UBR for 2010/11
Under legislative requirements, rating revaluations area meant to be revenue neutral and so, as the total Rateable Value of all properties is expected to increase, the Government expects the Uniform Business Rate (UBR) to reduce to about 41.3p next year from the current 48.1p. There is also likely to be a Small Business Rate supplement but to further confuse matters Royal Assent for the Business Rates Supplement Act 2009 was granted in July which provides powers for local authorities in England and Wales to levy additional charges to specifically fund local economic development, such as infrastructure projects. This change could enable charging authorities in London to levy an additional charge in order to fund the Crossrail Link.
Transitional Relief
Since 2003 the Government has been required by statute to introduce transitional arrangements in order to phase in the effects of a rating revaluation and to provide relief for rate payers facing large increase in bills. At present no such scheme has been announced for the 2010 Revaluation but the Government has issued a consultation paper in which four alternative options are put forward. Responses to this consultation paper are required by 23rd September but at present the Government seems to favour a five year scheme with both increases and decreases phased as follows:-
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Maximum Increases
(real terms)
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Maximum Decreases
(real terms)
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Small Properties
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Large Properties
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Small Properties
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Large Properties
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2010/2011
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5%
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12.5%
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20%
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4.6%
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2011/2012
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7.5%
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17.5%
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30%
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6.7%
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2012/2013
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10%
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20%
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35%
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7%
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2013/2014
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15%
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25%
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66%
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13%
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2014/2015
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15%
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25%
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55%
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13%
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In Scotland, the 2005 transitional scheme was very different to that in England and there is no statutory requirement in Scotland for the introduction of any such scheme for 2010. No decision on transition is expected until shortly before the new Rating List comes into effect and whilst under the 2005 revaluation there was commitment to harmonise the UBR rate with England, there may be some pressure for Scotland to adopt a higher UBR rate for the 2010 revaluation.
In Wales there was no transitional scheme for the 2005 revaluation and there is no apparent intention by the Government to introduce one for 2010.
What can Ashwell Rogers do for you?
Ashwell Rogers was founded in 1996 but our rating experience runs right back to the 1973 rating revaluation. Under every rating list since then we have successfully achieved significant rates savings for our clients by providing professional advice and undertaking rating appeals on a variety of different property types, including high street and out-of-town retail outlets throughout the UK, restaurants and hotels, car dealerships and major office buildings in Central London.
It is very important that all ratepayers are prepared for the likely impact of the 2010 revaluation by looking at the levels of rent that they are currently paying so that quick evaluations can be made on whether appeals should be lodged against their new levels of rateable value.
Rates is a complex subject, often considered to be one of the "Dark Arts" and whilst we do not profess to perform miracles, at Ashwell Rogers we undertake to provide sound professional advice at reasonable cost. We have the experience and knowledge that you need to make sense of the conundrum that is called Rating and would welcome the opportunity to assist you in reducing your costs of occupation.
Examples of Our Expertise
If you need advice on any rating matter please do not hesitate to contact:
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Roger Dunlop
Partner
020 7758 3281
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