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Rates rise will hit businesses hard according to LSH

wantspacegotspace.co.uk - Rates rise will hit businesses hard  according to LSHAlmost all businesses across the South West will see their non-domestic rates bills rise by 3.15% from 1 April next year, according to national commercial property consultancy Lambert Smith Hampton (LSH).

Whilst this may appear to be only a limited increase, it is still an increase in very hard economic conditions and there is much worse news on the horizon for many businesses, said Paul Stevens, director of rating at the South West office of LSH.
He was reacting to this week’s announcement of the RPI figure for September. In their simplest form, rates bills are a product of multiplying the rateable value on the property by a National Non-Domestic Rate in the Pound.
Between revaluations, the rate in the pound is reviewed annually in line with the RPI figure. The rate from 01 April 2014 looks likely to be 48.5p so that for every £1,000 of rateable value a ratepayer will pay £485 in rates.
Paul said: “Actual bills on properties may vary from this as individual occupiers are able to benefit from various reliefs. Registered charities for example are able to secure mandatory relief of 80% on their bills. At the start of the rating list, bills may be further complicated by ‘transitional relief’. Four years into the current list, most properties have however come out of transition.
“Historically rates revaluations have taken place every five years. The current rating list started on 01 April 2010 and rateable values are based on rental evidence from 01 April 2008. For many classes of property this was the peak of the rental market but, whilst rental values have fallen, the rateable value continues to be based on the historically higher value. The rate in the pound at the start of the current list was 41.4p/£. The forecast figure of 48.5p/£ is therefore a rise of over 17%.
“As a result, rates liabilities are becoming an increasing proportion of property costs for many businesses. Proposals to delay the next revaluation by two years from 01 April 2015 to 2017 mean that any corrections to rateable value will be delayed.”
At each revaluation, the rate in the pound is amended so that the total revenue collected from non-domestic rates, remains constant. When the total rateable value of all properties in the country has gone up between lists, this has allowed the rate in the pound to be reduced.
However, it appears likely that this will not be the case at the next revaluation and it is predicted that a rate in the pound in the order of 60p/£ will be required in order to ensure that the government collects the same revenue following a reduction in the total of all rating assessments. This approximates to a 45% rise in the level of rate liability relative to rental value between lists.
Paul added: “Many businesses which have seen the rental value of their properties fall since the last revaluation had been hoping that falls in rating assessment at the next revaluation would result in reduced rates bills. The delay in the revaluation for these firms is not good news and the prospect of an increased rate in the pound is even worse.
“By way of example, a North Devon holiday park which, based on the evidence, might currently expect it’s rateable value to fall by 30% at the next revaluation, will also be subject to an increased rate in the pound so that bills in 2017 will actually be fractionally higher in 2017 than in 2010 despite greatly decreased income from which to pay this bill.
“For properties where rental values have remained stable, or even continued to rise, the situation is potentially even worse as the revaluation will see their bills rise due to increases in both their rating assessment and the rate in the pound.
“Ratepayers need to take professional advice now to ensure that their properties are correctly assessed and their bills calculated to take account of all available reliefs. Successful appeals may be backdated in their effect to 01 April 2010 resulting in refunds of overpaid rates bills.
“Corrections to the 2010 rating list will also avoid errors being carried forward to the next list and ensure that the lowest possible base liability is used if transitional relief calculations need to take place following the next revaluation.

Posted by The Editor (wantspacegotspace) on 21st October 2013

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