The UK Government has released high level figures on the percentage changes for the new Rateable Values applicable from April 2017. In this article we look at some of the headline figures, consider the problem areas, and discuss whether you may be being overcharged.
The key points to note are:
- Draft Rateable Value information is now available online
- Business Rates on London properties are set to significantly increase (especially in the case of retail),
- Large infrastructure clients will also be hit hard by the changes
- Generally speaking, there is some reassuring stability for regionally based businesses, however those with larger property portfolios may suffer.
Rateable Value
The Rateable Value (RV) of a property allows the Local Council to calculate the rates payable by applying a 'multiplier' to the RV (the provisional multiplier is 48p in the pound, with smaller properties at 46.7p).
Various reliefs and exemptions are then applied. As a result of the revaluation, London is set for a significant increase in RV-11% overall, and 14% in retail alone. The same is true of the “central list” (set for an increase of 28%) which is made up of infrastructure assessments spanning large geographical areas such as gas pipelines, electricity networks, etc…
So, while this first look doesn't tell the whole story, it gives a good indicator of how rating costs are likely to change in 2017. The new Rateable Values can be accessed via a government website which you can access here.
Total Tax Contribution
In the context of Total Tax Contribution, business rates are now the second largest Tax borne by the 100 Group, after employers NIC. To find out more you can access our 2015 TTC survey here.
There is also a consultation document on a transitional relief scheme to phase in increases and decreases in bills from April. Under these plans, the Government is planning to give relief to smaller properties but larger properties could see an increase in their rates bills by up to 60% by 2018. You can access the consultation here.
Estimated headline changes, by sector and region are shown in the table below.
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Central list |
Retail |
Offices |
Industry |
Other |
Total |
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|
North East |
|
-16% |
-21% |
-9% |
-1% |
-11% |
|
|
Yorkshire & Humber |
-11% |
-21% |
-9% |
-4% |
-10% |
|
|
|
North West |
|
-15% |
-14% |
-12% |
0% |
-10% |
|
|
West Midlands |
|
-11% |
-16% |
-7% |
1% |
-7% |
|
|
East Midlands |
|
-5% |
-2% |
-7% |
3% |
-3% |
|
|
East |
|
-13% |
-7% |
-7% |
2% |
-6% |
|
|
South West |
|
-14% |
-10% |
-5% |
1% |
-6% |
|
|
South East |
|
-8% |
-3% |
-4% |
6% |
-2% |
|
|
London |
|
14% |
10% |
4% |
14% |
11% |
|
|
Central list |
28% |
|
|
|
|
28% |
|
|
Total |
28% |
-5% |
1% |
-6% |
5% |
0% |
|
|
Before inflation and the adjustment to the multiplier for future appeal outcomes. All bills before transitional relief and small business rate relief. |
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Are you being overcharged?
Business rates are payable on most commercial property, but are all those charges correct and legally payable? Here are a few questions you should ask:
- Has the building been overvalued?
- Have all the reliefs and exemptions that are due been claimed?
- Have the charges been properly and legally demanded?
What are the problem areas?
Any occupier or owner who holds business premises needs to consider the cost of business rates. Large property portfolios with a high turnover of tenants often experience a large number of errors in billing.
There are also a number of opportunities to claim empty property relief and other exemptions, such as:
- occupying property that is not fully in use
- restructuring spaces
- planning to relocate
- rationalising space
- building property
- planning to demolish an empty building
- re-developing a site.
How can PwC help?
To start with we'd recommend a Business Rates Health Check, in which we can:
- Review your Rates bills to check whether they are legally payable. Often errors are made on things as simple as when you first become the ratepayer for a building.
- Review vacancy periods, refurbishments, and future plans to see what additional reductions may be due.
- Check whether you are being charged for the correct property. E.g. we have seen cases of charges levied for parts of buildings the occupier do not actually rent.
- Test the strength of your current appeals strategy
This exercise will pick up errors and highlight potential savings, giving you the opportunity to claim refunds. If you would like further advice or have any questions please contact Phil Vernon, Helen White or your usual PwC contact.