If you were shocked by the scale of rates’ increase your small business was set to face under the recent revaluation of commercial property, then you may well have drawn comfort from the fact that the government committed to soften the blow for the thousands of small business who were hardest hit with a £300 million business rates relief package. Sadly, it would now appear that after last week’s snap general election announcement, that commitment has now been put on the backburner. Any transitional business rates relief package will now be the responsibility of the next government.
Under the recent revaluation of commercial property across the UK, rateable values more than doubled in some parts of the country – particularly in the South East. The scale of the increase for some small business was in fact so large that it potentially threatened their long-term viability. Following the revaluation, it was hoped that small retailers would receive financial help through the support fund within a matter of weeks. However, now the general election has been announced, the Department for Communities and Local Government has confirmed it will fall to the next government to publish its response to the recent consultation on how best to implement the package.
In response to the Department for Communities and Local Government announcement, Mark Rigby, chief executive of business rent and rates specialists CVS, said:
“The relief fund was negotiated and designed to help those shouldering the biggest increases through the revaluation.”
“For the distribution of that relief to now be delayed is an unhappy consequence of the general election and will cause grave concern to small businesses already worried about the burden they are facing.”
The protocol for the rateable review of non-domestic premises is that a revaluation normally takes place every five years to ensure businesses are paying their fair share of business rates. However, that protocol was abandoned, and revaluation delayed by 2 years, following the economic downturn. The last revaluation in 2010, was based on property values as they stood in 2008. Since the economy has more or less recovered since 2008, the sharp growth in property prices since that date was reflected in the latest revaluation.
There was widespread criticism of the business rates changes from business and accountants, particularly those based in the South East of the country. The Government, however, defended the changes, calling them ‘fair and impartial’, and insisted that that the system needed updating and that it was cutting business rates. It also stated that three-quarters of businesses would experience no change to their existing rateable values and that 600,000 firms across the country would actually see their rates cut entirely.
However, research by CVS has found that under the new system the average rateable value of stores across England and Wales rose by 8.5 per cent at the start of April. Meanwhile the value of shops across rural areas like Southwold, Blaenavon, Dolwyddelan, Port Isaac, Kenley and Corwen has risen by more than 100 per cent.