Business Rates: Are Northern Businesses set to Subsidise their Southern Brothers?

The Government’s proposals to cancel the 2015 rates revaluation will see many small struggling businesses forced to pay taxes against 2008 valuations, made near the peak of the property boom.

This decision was meant to go unnoticed, slip in without warning or consultation, and rub salt into the wound Ministers, somewhat unconvincingly, claim this will provide “stability” for many businesses. One even compared it to having a “fixed-rate mortgage.” However,  some commercial property values outside of the South and South East have fallen by up to 40 per cent since 2008.

The effect of this is that many businesses will have to pay excessively high business rates for a further 2 years that have no bearing on their property rental values, and many shops and businesses will be taxed off the high street and trading estates.

Hundreds of thousands of businesses in the North are having to pay higher business rates, which are seen by many as subsidising parts of the South.

Those in lucrative locations such as London and the South East, where rental values have increased, will benefit from the move, while hard-hit retailers in Northern cities and elsewhere will continue to be suffocated by being charged business rates based on pre-recession values.

Business rates for many are the third biggest outgoing after rent and staff costs, and in many cases, they have overtaken rent. As an example, Timpson’s shoe repairers looked at opening a new site in Stockport but business rates of £18,000 are nearly twice the level of rent at £10,000.

The Government is now under increasing pressure to reverse this decision; however, with the valuation office facing 250,000 appeals against the 2010 rating list and a 5-year backlog and with 75,000 outstanding appeals against the 2005 list, is the Valuation Office capable or fit for purpose?

Are your Business Rates too High? For a low-cost inspection and review, contact the team.