DCLG to postpone rates revaluation: Time for root-and-branch reform of business taxation?
This means the revaluation due for implementation in 2015 will not take place until 2017, prolonging the duration town centre businesses have to pay rates at 2008 levels when the rental market was performing well. This is on top of the customary rise (£175 million) next year due to inflation calculated using the Retail Price Index.
ATCM believes that this would disadvantage most businesses in town centres. Although the Government claims that businesses would be provided with tax stability because of the postponement, in reality rates would have come down overall to reflect the downward pressures of rental levels in the property market. This announcement will also impact on landlords who are residing over long-term vacant property due to the withdrawal of rate relief after three months.
The announcement has come under severe criticism from the retail and property industry. ATCM is concerned such a change in primary legislation will prohibit retailers from paying rates which are reflective of today’s economic climate rather than the climate of 2008 and demonstrates the likeliness of deep flaws in our system of taxation. There is speculation that the Government’s hand has been forced because local government will become highly dependent on business rates income from April 2013 due to reforms in local government finance. ATCM accepts that local government needs the necessary financial incentives to invest in economic development in town centres, however question marks remain over whether we have a balanced and fair system at present.
ATCM believes that fundamental review of business property taxation should take place to identify a fairer way forward for government, businesses, landlords and all other stakeholders. In the meantime the revaluation should go ahead. Failure to do so could be catastrophic for town centres. Research* has shown a further 10% of units have a very high risk of failure. 17% of units have a high risk of failure of failure and 20% of units are already either vacant or charity shops.
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