Real Business

In order to control – never mind reduce – your property overheads, it is critical to understand the facts:

• Business Rates are levied nationally by central government, collected locally by Local Authorities. The last revaluation took effect in April 2005 and the new revaluation takes effect from April 1, 2010

• The aim is not to raise additional cash but to rebalance commercial property values

• The valuations (rateable values) themselves are based on 2003 levels of value for the current list (2005) and 2008 values for 2010

• The 2008 date is right on the cusp of the financial downturn, or, if you are based in central London, arguably the very peak of the rental market. The 2010 assessments therefore reflect values at 2008 and not current-day values. At this stage of the economic cycle, this is the very last thing most businesses need to hear

There will be “winners and losers”, depending on the type of property you occupy and where in the country you are located. Why?

• The total value of business premises in England has risen by approximately 18 per cent in the five years between 2003 and 2008, so we now see an 18 per cent fall in the tax rate from 48.5p/£ for 2009/10, to 41.4p/£ for 2010

• Your assessment would have to go up more than 18 per cent higher than previously before you pay any more in rates

• Offices in the West End of London have seen increases of more than 100 per cent in some cases, whereas industrial premises in the North of England have actually fallen in value

Mitigating the “nightmare scenario”

• The government are to cushion the full impact of increases by a 12.5 per cent cap on the maximum increase in the rate bill over the current year 2009/10

• To pay for this generosity to the “losers” from revaluation, the “winners” – those due reductions – will only see a maximum reduction of 4.6 per cent over last year

• The transition scheme lasts for five years and percentages of increase escalate to 17.5 per cent in year two, up to 25 per cent in year four

• Once the calculation of full rates payable is reached, properties cease to be in transition

• The tax rate, or poundage, will also increase by at least the rate of inflation every year

You can appeal

• You can appeal your current assessment up to March 31, 2010 and your new assessment at the April 1. Because of transition, the existing assessment may be more relevant to what you pay going forward than the new one – at least for the first years of the revaluation

• There is generally only one right to appeal for each list, although material change appeals are possible

• The new list is certainly open to challenge based on values adopted in many parts of the country

• If you want to adjust your 2005 value and potentially save money, time is short

Remember this briefing note is a general summary of the Rating Revaluation position. It should not be regarded as a substitute for advice on how to act in a particular case.

Roger Messenger is Rating Consultant at Kushner www.kushnerproperty.com

Picture: source http://www.flickr.com/photos/31796655@N07/2974942783/