IMPLICATIONS ON TODAY'S RPI READING ON BUSINESS RATES
Commenting on the implications of today’s RPI reading on business rates, Robin Ellis, Director, CBRE’s Property Tax Group, Rating & Leasing Consultancy in Leeds says:
“Today’s RPI reading of 3.9% spells further bad news for ratepayers on top of April’s revaluation, as it is the basis on which rates bills for 2018-19 will be calculated. While ratepayers will be comforted that business rates indexation will move to CPI from 2020, today’s announcement piles further pressure on an embattled Philip Hammond to provide some relief to businesses already facing higher inflation. His leading option will be capping the increase at 2%, as his predecessor did for two years running. A 3.9% RPI increase will in particular be a blow to the many ratepayers outside the southeast of England who received long awaited reductions in rateable valuations in the 2017 rating list. There are many regional ratepayers who saw up to a 50% fall in rateable value between the rating lists. For those with properties over £100,000 RV the RPI figure will all but wipe out the already minimal permitted reduction in liability of 4.6% provided for by the government’s onerous scheme of transitional relief meaning in practice liability will only reduce by 0.9% in the coming year.
“Mr Hammond has indicated that he will look to change the law with regard the much publicised and heavily criticised “staircase tax” whilst Greg Clark has suggested that a business rates review is at an advanced stage. A cap on the increase in rates liability for 2018-2019 and legislation to remove the staircase tax would be a start but we would encourage the Chancellor to go further; a commitment to more frequent revaluations and reform of the new appeals system are also required.”