Autumn Statement and
Business Rates
IRRV London and Home Counties Association
December 2014
Gordon Heath BSc IRRV (Hons)
IRRV National Council Member
Chairman IRRV Law and Research Committee
Honorary Member of the Rating Surveyors Association
NNDR – Financial Background
• July 2006 – the US housing bubble burst
• March 2007 – the US subprime mortgage industry
collapsed
• August 2007 BNP Paribas blocked withdrawals from 3
hedge funds
• September 2007 – UK – run on Northern Rock
• April 2008 - Empty Property Rates doubled to 100%
• April 2008 – Valuation date for 2010 rating list
NNDR – Financial Background
• September 2008 – Lehman Brothers collapsed
• October 2008 – UK stock market collapse
• October 2008 - UK - £500bn bank rescue package –
RBS and Lloyds –TSB were main recipients
• April 2010 – Rates revaluation
• 2015 Rates revaluation postponed to 2017
NNDR – Financial Background
Background - State Aid and NNDR
• State Aid limits apply where 1. There is an economic advantage
2. It involves the transfer of State resources
3. The Aid is selective
4. It has a potential effect on competition and trade
• BUT –
5 Is it covered by a Block Exemption or de minimis?
6. Is there an existing National Aid Scheme?
7. Otherwise needs individual approval
Background - State Aid and NNDR
• Generally State Aid does not apply where it is part of
how the tax is set up
• Generally it does apply to discretionary reliefs above the
de minimis limit
• Mandatory Rate Reliefs – not State Aid
• Discretionary reliefs – State Aid except for de minimis or
flooding relief
• Flooding Relief covered by GBER 2014, article 50 –
limited to net loss incurred.
Autumn Statement 2014
• Extending 100% Small Business Rate Relief to 31st
March 2016
• Temporary increase in relief from 1 October 2010
• 100% below RV £6,000
• Sliding scale below RV £12,000
• Does not apply where Rural Rate Relief applies
• Since April 2012, small multiplier applies to all properties
below RV £18,000 (£25,500 in London) except empty
properties and properties subject to mandatory relief
Autumn Statement 2014
•
•
•
•
•
2% cap on inflation increase in 2015/16 Multiplier
September RPI increase was 2.3%
Provisional small business multiplier 48.0p (+ 1.9%)
Small business relief supplement 1.3p
(+18%)
Provisional non-domestic multiplier 49.3p (+ 2.28%)
Autumn Statement 2014
• Increasing the temporary £1,000 discount to £1,500 for
2015/16 for occupied retail premises - shops, pubs and
restaurants with RV below £50,000
• Does not apply if the use is not retail use – banks, estate
agents , doctors, solicitors, post office sorting offices, etc.
• Subject to State Aid limits
Autumn Statement 2014
• Extend “transitional relief” for 2 years
• RV up to and including £50,000 only
• Limits bill increases on small properties (below £18,000
RV or £25,500 RV in London) facing increases above 15%
• Limits bill increases on medium sized properties up to
£50,000 RV facing increases above 25%
• No extension of transitional surcharge
• Calculated AFTER other reliefs
• It is a S47 DISCRETIONARY DISCOUNT, not transition
• Subject to State Aid limits
Autumn Statement 2014
• Limits backdating of appeals to 1 April 2010 to
ratepayers’ appeals made before 1 April 2015 and VO
alterations made before 1 April 2016
• Effectively what would have happened if there had been
a 2015 revaluation
• Rush of appeals?
Autumn Statement 2014
• The Government will review the future structure of
business rates and report before the budget in 2016
• Will not change the principle that some business rates
will directly fund local government – retention scheme
• Will consider the impact on local government funding of
any changes to business rates
• Will publish the interim findings of the business rates
administration review – clearer billing, better information
sharing and more efficient appeals system
• Will publish a business rates avoidance
discussion paper
Property Owner BIDs
• The Business Improvement Districts (Property Owners)
(England) Regulations 2014 (SI 2014/3204)
• Came into force on 2 December 2014
• Property owner Business Improvement Districts can be
promoted where a Business Rate Supplement and a
ratepayer BID are in place
• Only in London at present
Administration Review – Interim Findings
• Published on 10 December 2014
• https://www.gov.uk/government/publications/administrati
on-of-business-rates-in-england-interim-findings
• Proposals to respond to calls for clearer billing, better
information sharing and more efficient appeals system
Administration Review – Interim Findings
Administration
• Most favoured individual valuations, as now
• Just over half favoured more frequent revaluations to
better align RVs to market conditions
• Significant minority did not favour more frequent
revaluations – decreased certainty and stability
• Billing and collection needed improvement – digital
options should be explored
• Views varied on improving the gathering of information
Administration Review – Interim Findings
• Annex – how more frequent revaluations might affect bills
• Background analysis by VOA
• More frequent revaluations increase the responsiveness of
bills but only to relative changes in rental values
• More frequent revaluations only increase stability when
property values follow a steady trend. When rents are
cyclical - pick up rents at different points in the cycle
• Historical data indicates cyclical rents with different
frequencies – Not possible to say whether
more frequent revaluations increase or
reduce volatility
Checking your RV Consultation - responses
• Published on 10 December 2014
• https://www.gov.uk/government/consultations/checkingand-challenging-your-rateable-value
• 71 responses – generally supportive but many wider
points made
• Proposed RV Information Sheet would not provide
sufficient information?
• Difficult to provide fuller evidence?
• Government considering reform of the appeals system
within the context of the review of business rates
administration
Business Rates Avoidance Discussion Paper
• Published on 10 December 2014
• https://www.gov.uk/government/consultations/businessrates-avoidance-discussion-paper
• Builds on work undertaken by DCLG led working group
• Requests responses from interested parties on type and
scale of avoidance and ideas for solutions
• Responses by 28 February 2015