Over the past few months, there has been a gathering storm of protest at the way businesses and property investors are taxed through business rates.
We work on behalf of our clients to negotiate business rates to ensure that they are getting a fair deal on their commercial premises. However, whilst savings can be made by through business rates negotiations, which generally focus on ensuring that assessments are accurate, retailing lobby groups, manufacturers and investors continue to criticise business rate tax and campaign for change.
For many commercial tenants, particularly in the North of England, current business rates are unaffordable and place an enormous strain on the finances of small companies. This is due to the fact that present rateable values for the retail sector are based on rents achieved at the height of the market when rents were at an unsustainable level. For some businesses, these rates are now almost as much as the rent on their premises!
For those in the manufacturing sector, further issues may arise following investment in new plant or machinery, as a rating by the Valuation Office Agency could wipe out some or all of any capital allowances given.
Many commercial landlords are also feeling the pressure, as they must pay full empty rates on retail and office space following the three-month void allowance. Landlords can access mitigation schemes through specialist consultants but these often come with a considerable fee.
Further, charitable organisations that take up commercial property space often expect it to be rent-free and for the Landlord to share the rates saving with them, leaving landlords not a great deal better off. Empty rates liability has impacted on the value of some buildings, to such an extent that some office buildings have been sold at historically low prices for conversion to residential use. The Government, in turn, assisted in this by relaxing planning law to make such a change easier.
Business Rates reduction for vacant retail premises
On another positive note, the Chancellor’s announcement in the Autumn Statement 2013 confirmed that retail premises that had been vacant for more than 12 months would be eligible for 18 months of business rates payable at half of the normal rate when the premises are re-let.
This is good news, particularly for cities such as Bradford, which awaits the emergence of major shopping centre investment in the near future. In the meantime, Bradford, which has several long-standing vacant shop units, could potentially benefit from this rates relief.
Bradford is offering both existing and new city centre businesses within the Growth Zone business rates reductions where they are taking on new staff, and the Council plan to extend the Scheme through to the end of 2015 when the Westfield Shopping Centre us due to open for trading.
Business Rates Revaluation
The Chancellor has also promised a complete overhaul of the business rates system in 2017.
Our wish list would include higher allowances for premises which have access difficulties; production by the Valuation Office of floor plans simplified if necessary making it clear what is included in the assessment; and exclusion of tenants fixtures and fittings from the assessment.