A commercial property expert has welcomed the Chancellor’s announcement that business rates are set to be reviewed.
David Bailey, Commercial Property Disputes partner, warns that business rates are a significant overhead for any business owner or occupier, even when a property is empty. Currently once a period of empty property relief passes, businesses get the ‘double whammy’ of increased costs and no income, often with a commercial mortgage to pay.
Commercial property in Britain is usually revalued every five years to govern business rates, but in 2015 was delayed by two years, meaning any increases are likely to be more pronounced.
Following appeals by the business community, the Chancellor has now announced that measures are to be taken to help ease the burden of business rates, and the system itself will be reformed to make the revaluation process “smoother and more frequent to avoid the dramatic increases the present system can deliver.”
Under the plans, revealed in Wednesday’s Budget, three measures are to be introduced:
- No business coming out of empty property relief will see its bills increase by more than £50 per month.
- Recognising the role local pubs play in communities, a £1,000 discount will be available during 2017 for pubs with a rateable value of less than £100,000 – 90 per cent of all pubs.
- Local authorities will be allocated part of a £300million fund to deliver ‘discretionary relief’ to individual cases where businesses are struggling.
In his speech the Chancellor revealed the package of measures would result in business rate cuts worth more than £400million.
David Bailey of Napthens said: “We welcome the news that the Chancellor has listened to the concerns of the business community.
“Business rates can be a big issue for many businesses, particularly SMEs and those landlords facing long periods of a property being empty.
“It’s good to see that the licensed trade is being given specific relief as this is a sector that has publicly struggled in recent years, and while it looks many like most areas should see reductions in business rates, we welcome the fund to deliver support to what the Chancellor called ‘hard cases.’
“However, as always the devil is in the detail, and we have already been told by the Chancellor that cuts in tax in one area will likely be matched by increases in others.
“What these announcements will mean for businesses in the long term is difficult to predict, and as yet we don’t have full details of how the reform of the system, or the allocation of funds via the new discretionary relief system, will work.”