In yesterday’s 2017 budget, Phillip Hammond made a series of pledges that in one fell swoop, answered all the calls for business rates reform that businesses and stakeholders have been asking for for years.
From 2022, three-year property revaluations will be introduced, instead of the current five yearly pattern. This will prevent large swings in premises’ rateable values that in turn will make businesses liabilities more predictable. In earlier budgets the government had talked about more frequent revaluations, however this was expected to come to fruition in later years.
Richard Sellers of Fairhurst Estates explains:
A surprise pledge was the chancellors’ announcement concerning ‘staircase tax’, the 2015 Supreme Court ruling in ‘Mazars’ directs that buildings that are occupied by two or more businesses must be rated in as many parts as are capable of being let. Consequences of this pledge is that it requires new legislation and therefore cross-party support, is that companies taking large spaces of adjoining multi storey office blocks could have their rates bulls reinstated the pre-Mazars practice of having a single rates bull that could contain some form of discount for economies of scale. More details on this will be released soon.
From April 1st 2018, annual percentage adjustments in rates bills will switch from RPI (Retail Price Index) to CPI (Consumer Price Index), a move that the Chancellor has suggested will save £2.3bn over the next 5 years.
In summary, this was not a significant budget for business rates, however it is good to see that cries for change have not just been heard, but acted upon, much faster than expected.
Expert Opinion provided by Fairhurst Estates