Major business rates hike expected for Central London
Thursday, 29 September 2016
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This week sees the unveiling of the draft list of rateable values (RV) for the Government’s 2017 Rating Revaluation, which takes effect from 1 April 2017. All commercial properties are to have their rateable values re-assessed, based on rental levels at 1 April 2015, and it is these that will be used to calculate liabilities for the next five years.
Central London businesses face major increases in business rates from next April, an issue which has been exacerbated by a decision by the DCLG. Rateable Value increases were already expected to rise significantly across the capital from the new revaluation. The expectation is that the majority of central London bills will increase by over 20% next year.
In previous revaluations the government has tempered year on year increases through liability caps. The scheme announced yesterday offers two options, either year one increases capped at no higher than 33%, or the preferred option of no higher than 45%.
David Jones, Senior Director in Business Rates at Bilfinger GVA criticises the extent of the increases for businesses across the capital: “The new RV £100,000 threshold, above which the higher caps will apply, affects a high majority of business in the capital and will apply to what represents relatively modest levels of occupation.
“With Brexit uncertainty and concerns over business relocations out of London, hitting business with significant and unexpected business rates increases is poorly thought through. We have specific concerns for the vibrant medium sized retail and independent restaurants across the capital that will experience the very highest increases, facing fixed costs increases which could severely hinder their ability to trade.”
To help businesses check what their 2017 rateable value will mean in terms of actual rates payable over the next five years, Bilfinger GVA has created a free-to-use Rate Liability Calculator* at www.gva.co.uk/businessrates.
The Government’s revaluation includes a new process for the appeals system in England, introducing a fundamental change to the way rating appeals are heard. It introduces three distinct stages and places far more onus on the ratepayer to provide more detailed information about their property at the outset.
The Check, Challenge, Appeal process starts with the ratepayer or its agent confirming the floor areas, rent and specification of the property. The Valuation Officer (VO) reviews these facts and, if appropriate, amends the rateable value. If the ratepayer still disagrees with the rateable value there will be a statutory right to proceed to the Challenge stage after 12 months, although the Government anticipates this timescale will be much shorter in practice.
Following the conclusion of the Check stage the ratepayer has four months to formally challenge the Valuation Officer’s rateable value. The ratepayer must provide full supporting information, their valuation, comparable evidence and detailed reasons why the rateable value is wrong. Negotiations should take place before the VO issues its formal response. This stage could take up to 18 months and if an agreement cannot be reached the case is escalated to the Appeal stage.
The ratepayer then has four months to submit an appeal to the Valuation Tribunal. No further negotiations take place and only in exceptional circumstances can new evidence be introduced.