- Campaign group says that revaluations should be automated and carried out annually to avoid big, unexpected tax hikes
- Heathrow airport had the biggest business rate bill in 2016-17 of almost £120 million, with Sellafield in Cumbria next on the list with £32 million
The recent storm over business rates centres on the upcoming revaluation of commercial properties, which comes into effect on 1st April 2017. It is the first revaluation since 1st April 2010 and the valuation practice itself has changed in the wake of a 2015 judgement by the Supreme Court. Combined with changes to reliefs, some ratepayers’ bills are set to change significantly, including some eye-watering hikes.
Today (Monday), the TaxPayers' Alliance publishes a briefing note explaining the changes, how they will impact on taxpayers and what can be done to avoid controversy in the future.
Short term reforms
- Lengthen transitional arrangements
- Decrease transitional caps
- More or increased reliefs
- Bring forward switch from RPI to CPI for multiplier uprating
- Reduce multiplier rates
Longer term reforms
- Move towards an annual, automated process of revaluation which avoids cliff edges.
Complete overhaul
- There are strong arguments that business rates are not a good tax and should be replaced altogether. Features such as the exemption of agricultural land and buildings means that the system discriminates between different sectors
- In 2008 relief for empty properties was ended for commercial and industrial properties. Commercial properties were previously exempt from business rates for three months then charged 50 per cent thereafter while industrial properties were previously exempt from all business rates. It often makes sense for landlords to demolish properties to avoid paying business rates if they are unable to find tenants
The debate has been so heated in part because of the large amount of money raised in business rates:
- In 2015-16 business rates raised £28.8 billion, making it the sixth-largest revenue raiser. This was equal to 4.6 per cent of tax revenues. By comparison, Council Tax raised £29 billion and fuel duty £27.6 billion.
Highest business rates bills in 2015-16
1. Heathrow airport, Hounslow: £118,320,000
2. Sellafield Limited, Cumbria: £32,335,870
3. Sizewell B power station, Suffolk: £28,283,410
4. Gatwick airport, West Sussex: £27,849,570
5. Heysham 2 power station, Lancashire: £24,640,140
6. No 1 Maintenance Area, Heathrow: £20,301,740
7. Vodafone fibre optic network and Berkshire premises: £19,720,000
8. Hartlepool power station: £16,564,800
9. Corus UK Ltd, Lincolnshire: £15,460,480
10. Manchester airport: £15,302,720
TO READ THE NOTE IN FULL, PLEASE CLICK HERE
Alex Wild, Research Director of the TaxPayers' Alliance, said: "The row over business rates has been a political mess, and can be avoided in the future by reassessing the value of properties annually instead of letting delays build up to a big tax hike for thousands of firms. Businesses in expensive areas have every right to be angry at the scale of the tax hikes on the horizon, which explains why the Government is likely to include a package of reliefs at the Budget. What's clear is that we need a broader review of business and property taxation to assess whether it is fair and appropriate for the economy."
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