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Business Rates Revaluation 2017

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In April 2017 it is likely that you will experience a change in your business rates as a result of the business rates revaluation. In 2016 and 2017 there are key dates that will lead up to the new rating list being published and our timeline will guide you through that process.

Delays to the 2015 revaluation mean next year’s rating list is the first since 2010. With a turbulent economy over the past 8 years it’s likely that current rateable values do not reflect real market conditions. Over recent years rental levels in some regions have increased sharply, particularly in the South East, whilst conversely other regions are still experiencing lower rents following the market crash in 2008.

It’s therefore likely that the revaluation next year will see big changes in rateable values, with decreases to some in regions who are currently overpaying, but big increases for occupiers around the capital and other major UK cities.

A change in business rates can have big impact on a business, with increases eating into profit margins and potentially making a property unsustainable. For others, a decrease will be welcome relief, unless limited by a transitional relief scheme, as yet to be confirmed.

The process of the 2017 revaluation has already started, with the VOA gathering evidence from ratepayers around the country, and online registration opening as the VOA turns digital by default. With big changes expected around the country, and the introduction of a radical new appeal system called ‘Check, Challenge, Appeal’ it’s important to seek professional advice.

Our industry leading Rating team can help you plan for April 2017, understand options for rates relief that may apply to your business, and examine your options of appeal.

Managing Your Rates and Rates Bills

March 2016

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The bill you received in March 2016 is the last bill of the 2010 Rating List, and it's important to check if it's accurate. Most people will check that the arithmetic is correct and then sign it off for payment, however there is more to a rates bill than that. Rates management is an additional service that we provide to a growing number of rating clients.

We arrange to receive business rates bills directly from the local billing authority, ratify and authorise these over a very short timescale, before reporting back to you. Every account is given a multi-point check to ensure validity and accuracy. Where possible, we can often renegotiate installment payments to aid your cash flow.

Based on available information and taking the often complex transitional arrangements into account, we can then work with you to produce timely and accurate budget forecasts.

If required, we can also arrange for you to put us in funds to effect the payment of rates accounts by cheque, direct debit, BACS or most other methods.

By outsourcing the process of rates bills, we can save you considerable time and money. If you have ever tried to contact the correct person at a local billing authority, you will know how difficult and time consuming this can be. Liability experts deal regularly with the authorities concerned.


Online Registration

Along with your bill in March 2016 you will have recieved a flyer explaining that the Valuation Office Agency (VOA) is moving online. You need to register your email address with the VOA in order to recieve revaluation information. To understand more about registering online, and what it will mean for you in the future, just get in touch.

How Will Your Property be Valued for The 2017 Rating List?

January - June 2016

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The last assessment of business rates took place seven years ago, making it difficult to predict the values on your next bill. It’s likely that the revaluation will see big changes in rateable values, with decreases to some in regions who are currently overpaying, but big increases for occupiers around the capital and other major UK cities.

You should have recieved a statutory questionnaire from the Valuation Office Agency asking for information about your property. You need to complete and return your form to avoid a financial penalty. It's important to give the Valuation Office Agency as much information as possible about your property. The more information you give, the more likely they are to get your revaluation right the first time.

Our rating team can give you advice about how to complete the form.

Check, Challenge, Appeal - a New System for Ratepayers

Summer 2016

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Check, challenge, appeal is a new business rates system which is likely to make it more difficult for ratepayers to challenge their bills.

Check, challenge, appeal is due to be launched in April 2017. Our rating team will be able to advise you on how the new system might impact you and your business.

What is Transitional Relief?

June - October 2016

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As the current rating list is from 2008, it is likely that your rateable value will change as a result of the 2017 revaluation. With big changes in the rental values around the country in recent years, some occupiers will experience significant increases, particuarly in the South East and in major UK cities, whilst other regions will see welcome decreases.

Transitional relief is designed to help you avoid financial trauma by staggering payment increases and decreases that are a result of the revaluation.

The outcome of this consultation will ultimately affect how the revaluation will impact you financially. Our rating team are able to advise you on transitional relief.

What are Draft Rateable Values?

30th September 2016

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A draft of specific property valuations will become available from the Valuation Office Agency. The draft rateable value summary will help you understand your new valuation, and provide an opportunity for you to tell the VOA about any errors. Our rating team are able to review your draft rateable value for you, and ensure that your first business rates bill in 2017 is correct.

This information will only be available online via the VOA website, and they won't be sending out printed valuations. To get access, you need to register your details with the VOA.

Retail Price Index

18th October 2016

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The retail price index (RPI), which will be released by the Office for National Statistics, will be used to calculate the increase in business rates. The RPI will dictate the percentage by which rates will increase along with the rate of inflation.

The retail price index will affect what you pay in business rates. To understand in more detail how it will affect your business, contact our rating team.

Rates Bills Issued

1st March 2017

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These are the first bills based on the 2017 Rating List.

As with any business rates bill, it's important to get a rating expert to analyse it for errors, and particuarly as this is the first bill following the revaluation.

Our industry leading rating team can help you plan for April 2017, understand options for rates relief that may apply to your business, and examine your options of appeal.

 

Last Chance to Appeal the 2010 Rating List

31st March 2017

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31st March 2017 is the final date that you are able to appeal the 2010 Rating List. Any challenges to your bills should be reviewed for final appeals.

If you did not get advice from a qualified rating advisor following the 2010 revaluation then you may be paying more than you need to in business rates.

To appeal the 2010 Rating List it's important to contact a rating advisor as quickly as possible, to allow them to analyse whether you are entitled to a reduction in your business rates.

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New Rating List Published

1st April 2017

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On 1st April 2017, the new rateable values for properties around the country will be implemented. It is now possible to challenge your new rates, but you will need to use the new appeal system; check, challenge, appeal. 

Our rating team will help you examine your options of appeal, as well as understand any types of relief your business may be entitled to.

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Latest News

What do caravan park owners need to know?

What changes are under way?

On 1st April 2017, new rateable values for properties around the country will be implemented. This triggered a lengthy process, including a number of key dates throughout 2016 and 2017 that caravan park operators must be aware of.

Draft rateable values were published online by the VOA (Valuation Office Agency) on 30th September 2016, which help companies to understand their new valuation, whilst providing an opportunity for them to tell the VOA about any errors before the new rates are applied from April. For the first time, this information has only been made available online via the VOA website, and they won't be sending out printed valuations. To get access, you need to register your details with the VOA.

April 2017 will also see the introduction of a new appeals process called ‘check, challenge, appeal’, which will change the way in which organisations can appeal their rates.

How will it impact caravan parks?

Most caravan parks are likely to experience a change in their business rates as a result of the business rates revaluation. This is because the valuation date is set two years before the last revaluation and since there has not been a revaluation since 1st April 2010, local authorities in England and Wales are still basing their business rates bills on 2008 figures. This will change this year, as all non-domestic properties in England and Wales will be reassessed based on a valuation date of 1st April 2015.

We have a network of offices across the UK and working with caravan parks in different regions, we expect to see some large regional variations as a result of changes in the market over the last seven years.

Those parks that invested in new facilities, saw significant development or added a large number of new pitches between April 2008 and April 2015 can also expect to see changes in their rateable value, which is likely to impact their business rates bills.

What happens next?

Although the draft rateable values have now been published, businesses will not be able to calculate their new business rates until the Government announces the multiplier in January. New rates bills will be issued on 1st March 2017 and the revaluation comes into effect from 1st April.

The important thing is to seek advice from a qualified rating advisor as soon as possible to make sure you are not paying over the odds. They can assess your draft rateable values and analyse whether you are entitled to a reduction in your business rates.

 

How will the revaluation impact Bristol's retail, office and industrial sectors?

In what has been billed as the biggest change in a generation, the process of the 2017 business rates revaluation is well under way. Matthew Midwinter, partner and business rates expert, considers how the April 2017 revaluation may affect Bristol’s retail, office and industrial sectors.

What changes are under way?

On 1st April 2017, new rateable values for properties around the country will be implemented. This has triggered a lengthy process, including a number of key dates throughout 2016 and 2017 that the majority of sectors in the city must be aware of.

Draft rateable values were published online by the VOA (Valuation Office Agency) on 30th September, which help organisations to understand their new valuation, whilst providing an opportunity for them to tell the VOA about any errors before the new rates are applied from April. For the first time, this information has only been made available online via the VOA website, and they won't be sending out printed valuations.

How will it impact the retail, office and industrial sectors?

Most business, whether occupying retail, office or industrial space, are likely to experience a change in their business rates as a result of the business rates revaluation. This is because the valuation date is set two years before the last revaluation and since there has not been a revaluation since 1st April 2010, local authorities in England and Wales are still basing their business rates bills on 2008 figures. This will change next year, as all non-domestic properties in England and Wales will be reassessed based on a valuation date of 1st April 2015.

We have a network of offices across the UK, in addition to Bristol, and work closely with different sectors across the South West which enables us to experience some interesting variations. For example in Queen Square, rents have increased and therefore businesses, including our own office can expect rates to rise. As a rule, office rents are increasing across the city centre, but many retail rates are likely to be unchanged or even reduced.

We have also seen recent increases in office rents across the South West in towns such as Bath. But again, headline rents on retail in and out of town have fallen in recent years. In Exeter, rents have increased across all markets in recent years, albeit some secondary stock will buck the trend, so business should expect their rates to increase accordingly.

There remain areas of Bristol and the South West where rental values for many types of property have not recovered to their pre-recession levels, particularly in the retail sector but also offices and industrial properties and as a result those owners will most likely enjoy newer, much lower rateable values.

Whatever sector a business operates in, you should seek the help of a qualified rating surveyor who can ensure you are on the correct rateable value and advise on any small business rate relief you might be entitled to.

What happens next?


Although the draft rateable values have now been published, businesses will not be able to calculate their new business rates until the Government announces the multiplier in January. New rates bills will be issued on 1st March 2017 and the revaluation comes into effect from 1st April.

The important thing is to seek advice from a qualified rating advisor as soon as possible to make sure you are not paying over the odds. They can assess your draft rateable values and analyse whether you are entitled to a reduction in your business rates. 

 

Business rates are changing

The biggest, but perhaps the least surprising news to come out of the draft rateable values announcement, which was made on Friday 30th September, is that the revaluation will affect the South East of the country, in particular London, much more adversely than the North.

In London some retail premises are expected to see quite staggering increases of up to 400 per cent on their rateable value. However in the North of England, and the rest of the UK, the pattern is frequently reversed. In Leeds, for example, businesses fare much better with sizeable reductions in rateable values for many.

Any reductions, although positive news, won’t be felt immediately and business rates bills are unlikely to reduce by the full amount in the short term, due to the system of transitional relief to be introduced by the government. The phasing period dictates that those London businesses which have seen their rateable values go up could only have to pay a maximum of 45 per cent increase per year, plus inflation, over the next five years, which will cushion the transition and see bills increase slowly.

This effectively means that northern businesses that are owed a reduction will be helping to subsidise those seeing an increase and will see their bills slowly decrease over time rather than benefit from sharp reductions immediately. The big swings in valuation have been caused largely due to the delay in revaluation. Had revaluation taken place in 2015 and not been postponed by the government to avoid ‘sharp changes’ in rates, the gaps would have not been so wide.

In essence, the £23 billion that business rates generates in the UK every year will still remain. It will simply be redistributed, although that is only a crumb of comfort if you are still paying too much. Expert advice from a professionally qualified rating surveyor should be sought even if your assessment has decreased as it could still be excessive.

 

As a business owner, what do I need to know about business rates?

 

Business rates are a tax payable on non-domestic buildings, set by the Government and collected by your local Council. Similar to Council Tax for domestic properties, business rates serve as a contribution towards local services.


In England and Wales, business rates are calculated according to a property’s ‘rateable value’, which represents the open market annual rental value at the time of the last valuation date (currently April 1, 2008). This figure is then multiplied by the annual Business Rates Multiplier, which is set by the Government, to give the total amount payable before any deductions. Small businesses, for example, are eligible for small business rate relief which varies according to the rateable value of their property. All businesses will be sent their bill in February or March for the following tax year and asked to pay in monthly installments.


It may be a surprise for some people to see that the last valuation date was April 2008 and this is a source of much debate for many businesses. The valuation date (the date at which the annual rental value of the property is calculated) is set two years before the last revaluation and since there has not been a revaluation since 1st April 2010, local authorities in England and Wales are still basing their business rates bills on 2008 figures.


This will change on 1st April next year when the next business rates revaluation comes into effect. All business properties in England and Wales will be reassessed based on rental value as at April 1, 2015.


If you believe your rateable value is incorrect, you can appeal. There are a number of grounds for appeal, including a valuation or if a change has been made to the property that should be reflected in the rateable value, but you can only appeal against each of the grounds for appeal once. The appeals system is complex, and the Government has proposed changes with the introduction of a “Check, Challenge, Appeal” system.


The best advice when it comes to business rates is if you are not sure then you should get help from an expert. Opening a new business will inevitably throw up many challenges, and business rates are likely to be a minefield for all business owners, which is where a qualified rating surveyor can help. They can make sure you have the correct rateable value and advise on any small business rate relief you might be entitled to.

 

Delay in revaluation to cause regional biases

 

 

Simon Heather, partner in our business rates team, discusses the likely implications of the delayed business rates revaluation and how it may cause regional biases across England.

 

Most businesses will be aware of the government’s decision to delay the 2015 by two years, until April 2017, but many will not be aware of the particular implications of this from a rateable value, or rates liability, point of view – or the regional bias the delay has caused. The intricacies of the system (whereby rateable values are assessed using a valuation date two years prior to the revaluation date) means that properties will be now be assessed adopting prevailing values that existed as at April 2015, and not at April 2013.

 

Of course, in 2013, most areas of the country were still emerging from the devastating effects of the recessionary years, any assessment of rateable value at that time would have seen dramatic shifts, with very significant falls in assessments - particularly the North of the country, and especially in the retail sector. The aim of any revaluation is to fairly redistribute the overall liability (not to increase or reduce it) and so, like the movement of a see-saw, the implication is that the substantial liability reductions that would have otherwise be experienced in the North, would have effectively had to be funded in full by the south, in particular, London. You don’t have to be too cynical to see that the delay in the revaluation was politically motivated to avoid this very outcome. So whilst the North has been burdened with excess liability that ‘the rules of the game’ would otherwise dictate they should not have been, the South (and especially London) have been enjoying a very pleasant two year reprieve.


The 2017 revaluation is still likely to see significant North / South shifts in both rateable value assessment (and hence the resultant liability) but the variation is likely to be less pronounced than it otherwise would have been. The eventual economic recovery in many of the provinces could even mean that some areas will miss out on the fall in liability they were otherwise due. Manchester in April 2015 was in a very different economic place to that which existed in April 2013, particularly with regard to the office and industrial sectors. So, whilst Manchester retailers may finally welcome a correction in the form of significantly reduced liabilities, this is not to be expected across the board.

 

Business Rates Devolution to create further inequality between councils

 

Following the chancellors announcement to allow local councils to retain 100% of taxes raised through business rates on the 5th October 2015, we are still no clearer to understanding what the full effect of this will be.


Graham Isle, partner and business rates expert in our Leeds office, comments on the proposed business rates reform and how it might create more inequality between local authorities.


Under the current system, the government collects the estimated £26billion of business rates revenue and redistributes the money to councils in the form of grants. The devolution of business rates would see local authorities retain 100% of the business rates collected in their locality.


While this sounds like a move to empower councils across England and Wales, this will not necessarily be the case, with many of the smaller councils being adversely affected by the change.

Unwanted completion?


It is predicted that the reforms will incentivise councils to promote local economic development and growth, with each trying to better their neighbouring authorities in an attempt to win business investment and subsequently increase their gross rateable value. I doubt whether these powers are going to be utilised by councils and predict the change will just encourage unwanted competition.

Small business rates relief


In March’s budget it was announced that there would be an increase in small business rates relief, meaning that 600,000 small businesses across England and Wales would no longer have to pay business rates.


This announcement has significantly reduced the ability of some council’s to rely on money generated from business rates as a source of income. Based on the current rating list, 75% of businesses within Craven District Council could qualify for small business rates relief, a figure that increases to 82% in Scarborough Borough Council. This means that a large proportion of businesses would no longer be generating revenue for councils through business rates.

Devolution of power


There has also been a sharp increase in the number of local authorities granted the ability to create regional governments and regional mayors. In the past couple of weeks for example a South Yorkshire Mayor has been approved by the government with an election expected to be held in 2017.


One of the reasons why so many authorities are looking to appoint a regional mayor is that the chancellor added an extra benefit for those authorities with an elected mayor; enabling them to raise business rates in their constituencies, providing the money is spent on improving local infrastructure.


While this may impact upon some businesses abilities to pay their rates, I am unsure whether this will generate enough income, outside of London, to allow projects to get off the ground.


If you require advice about how this will affect you and your business ahead of the April 2017 business rates revaluation – please click here to contact our rating team.

 

Sharp rise in business rates expected for Milton Keynes based businesses

 

As Milton Keynes’s commercial property market experiences increasing rents and property prices, things look set to get even tougher for Milton Keynes based businesses with a sharp rise in business rates following the April 2017 Revaluation.


In Britain over the past ten years, Milton Keynes has held the top spot for the fastest growing city in terms of new businesses and jobs created. 


The council has facilitated this expansion with a pro-growth attitude that has seen housebuilding keep pace with the growing population, making Milton Keynes the ninth most popular property hotspot in Great Britain.


Due to this growth, it is likely that the Revaluation next year could leave Milton Keynes businesses with a significant increase in their rateable values, potentially making some properties unsustainable, and leaving many businesses with shrinking profit margins.


Why such a big increase?


The government conducts a Revaluation, normally every 5 years, to adjust the value of business rates and ensure they reflect the current property market. Due to controversial delays to the 2015 revaluation, this is the first revaluation since 2010.


This means that current rateable values do not reflect real market conditions, making it highly likely that they will increase significantly next year due to the booming property market in Milton Keynes in recent years.


What should I do to prepare?


The process of the 2017 Revaluation has already started, with the Valuation Office Agency gathering evidence from ratepayers to determine the new values. With big changes expected by the introduction of a revised appeal process against the new rateable values called ‘Check, Challenge, Appeal’, it has never been more important to speak to a professional Rating advisor.


Our industry leading Rating team can help you plan for April 2017, understand options for rates relief that may apply to your business, and examine your options of appeal.

 

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Small business rates relief has unwelcome affect on charities

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Robert Brown, partner in our rating department and president of the Rating Surveyors Association commented:

 

"In George Osborne's March Budget there was seemingly welcome news for charities with the 80% business rates relief that they currently benefit from remaining unchanged. However there are potential consequences of the chancellor's proposed business rates changes that may adversely affect charities when they come into effect next April.

 

George Osborne announced that around 600,000 small businesses would pay no business rates as he raised the threshold at which small business rates relief applies from a rateable value of £6,000 to £15,000. In what we can only imagine is an undesirable side effect this may lead to small businesses that qualify for 100% small business rates relief, trading right next door to a charity that will still be required to pay 20% of their business rates bill.

 

The move to increase thresholds and permanently double small business rates relief means that local authorities stand to lose £1.4bn a year. There is also the opportunity for charities to receive discretionary relief on the final 20% of their rates bill; this is provided by local councils in order to support those charities needing extra help. The changes discussed will likewise lead to a further squeeze on this relief currently available to charities as councils attempt to cope with the further financial pressure. This is yet another example of why the Chancellor should consult business rates experts before implementing changes."

 

Key facts from the 2016 Budget

Budget 2016 Rates

  • From April 2017 for properties below a rateable value of £12,000 qualifying businesses will pay nothing; between £12,000 and £15,000 there will be taper relief; and between £18,000 and £51,000 there will be a marginally lower rate poundage charged.
  • It is claimed by the government that 600,000 small businesses will pay no business rates.
  • The government will transform business rates billing and collection. By 2022, local authority business rate systems will be linked to HMRC digital tax accounts so that businesses can manage their rates bills in one place alongside other taxes. As a first step, the government will work with local authorities across England to standardise business rate bills and ensure ratepayers have the option to receive and pay bills online by April 2017.
  • The government will aim to introduce more frequent business rate revaluations (at least every 3 years) and will publish a discussion paper in March 2016 outlining options on how to achieve this to support both businesses and the stability of local authority funding.
  • The rate poundage will be linked to CPI rather than RPI from 2020.
  • Rates retention will move towards 100% for Greater London from April 2017.
 

Trades Union Congress see reduction in rates

TUC

The rateable value of the TUC Headquarters in London was increased considerably by The Valuation Office for Reval 2010 & following internal refurbishment works to the property.

We successfully argued that the increase in the rateable value was not justified and negotiated a large reduction in rates payable of over £750,000 in total.

‘Sanderson Weatherall has been our trusted business rates advisors for some time now and has always taken a proactive approach to minimising our rates liability. We have regular meetings with Matthew to discuss the progress of the Appeals against our rateable values, and he also provides future budget advice for each of the offices in our property portfolio in England & Wales.'

David Hemington, Head of Management Services and Administration Department TUC

 

Minimised liability for Universities

University of York

There was a significant increase in rateable values within the higher education sector between the 2005 and 2010 lists. The main reason for this is that the majority of academic buildings are valued by reference to build cost (contractors test), and over the last five years the key raw materials including steel and concrete have risen significantly in cost.

We have substantial experience and expertise in this specialist area of valuation having acted for the University of York and Newcastle together with a significant number of other educational establishments in the 1990, 1995, 2000, 2005 and 2010 list.


We are of the opinion that the strategy agreed with the University of York at the commencement of the 2005 list has been very successful and as a consequence the University has minimised its rates liability both by the judicious appeal of compiled list assessments, proactive appeal of assessments to reflect material changes in circumstance particularly in light of the construction works and the use of reliefs and exemptions. Significant savings were achieved and all opportunities for temporary reductions and reliefs were exploited.

We also carried out a rates audit for the University to ensure that the University’s internal accounts department are proficient.