Last month saw some major changes come into play with regards to business rates. Gordon Brown, consultant at Gordon Brown Law Firm LLP's corporate and commercial team, explains the changes and exactly what they mean for businesses in the region.
What has changed?
Small Business Rate Relief (SBRR) has been permanently doubled from 50 percent to 100 percent, and the thresholds have been increased to benefit a greater number of businesses.
Businesses with a property with a rateable value of £12,000 and below will now receive 100 percent relief, while businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief. This means that 600,000 small businesses, who occupy a third of all properties, will pay no business rates at all – a saving worth up to £5,900 in 2017-18 alone. An additional 50,000 businesses will benefit from tapered relief.
The changes have also increased the threshold for the standard business rates multiplier to a rateable value of £51,000, taking 250,000 smaller properties out of the higher rate. This will reduce business rates for many, mostly small, businesses.
What do businesses need to do?
If a company occupies business premises it will most likely have been inundated recently with speculative approaches from surveyors and other professionals claiming expertise in the reduction of business rates and promising significant reductions in rates liability in return for a cut of the saving.
On the whole in the North East our business rates will come down, significantly. That’s the benefit of our commercial properties being less valuable in rating terms than other parts of England and Wales, particularly the South East.
So, can North East businesses sit back and enjoy? Well, certainly that’s all some of us will have to do. However, if a firm is still left with a business rates liability after the changes, it may still be tempted into visiting a “rating specialist”. A quick search of that term will reveal a bewildering array of businesses vying for business and many stories of scammers operating in that field.
If my business property was valued for tax, especially if within 20 percent above any threshold, it is certainly worth engaging a rating specialist. Make sure to contact a trusted advisor, such as a solicitor, accountant or banker, for a recommendation of a local business, because local businesses have more intimate knowledge of local values.
Always ask for “no reduction, no fee” terms, and a business shouldn’t be paying any more than 15 percent of any tax saving as a fee.
However, don’t automatically follow their advice. What many do not say is that a rating valuation appeal could actually result in an increase in the rateable value of a business’ premises, and so its rates liability. If a possible reduction is marginal, and this increase could have a punitive result, the best option could be to do nothing. At least then the firm’s decision would be an informed one and the decision to do anything should remain that of the business owners.