Rateable Values Published

On 30 September 2016 The Valuation Office agency (VOA) published the draft Rating Lists and made these available on it’s website, containing the rateable values for all non-domestic properties in England and Wales that will take effect from 1 April 2017.

The revaluation in Scotland takes effect at the same time and the Valuation Rolls will be published at the end of 2016.

The new figures cover all 1.9 million non-domestic properties in England and Wales and whilst these valuations come into effect on 1st April 2017, they are based upon open market rental levels at 1st April 2015. Current rateable values are effective from 1st April 2010 and are based upon a rental valuation date of 1st April 2008. The UK economy and the property market has changed significantly between these two valuation dates and consequently, the draft rating lists reflect this movement in value both upwards and downwards.

As a result of this revaluation, the total RV in England indicates an overall increase in excess of 9%, whereas in Wales there is an overall reduction in total RV approaching 3%.

Different types of property show different degrees of change. Retail properties for instance show and overall increase, across England of 4.7% however, this masks significant declines in some areas and large increases elsewhere. This is also demonstrated by a total increase in office values across England in excess of 11% and for industrial property around a 4% increase, again with a wide variation of increases and decreases in different areas for both of these categories. There are also winners and losers in the other less “bulk” classes of properties.

In Wales a reduction in overall RV is the more general picture, with retail values down by nearly 9%; a 7% reduction in office values and the valuations for industrial properties falling by 4%.

The current figures are only draft valuations and can be changed by the VOA at any time before 1st April 2017, without notification. However, no appeals against these valuations can be made until they come into force in April 2017.

The Budget 2016

On Wednesday 16 March 2016, the Chancellor of the Exchequer, George Osborne, presented his budget to the House of Commons. Inevitably this had implications on the UK tax payer and the Business Rates payer was not excluded from this with most notable changes for small business as follows:

From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.

Currently, this 100% relief is available if you’re a business that occupies a property (e.g. a shop or office) with a value of £6,000 or less.

There will be a tapered rate of relief on properties worth up to £15,000. This means that 600,000 businesses will pay no rates.

It should however be noted that this relief is only available to small business which only occupy one property i.e. a company with multiple properties with RVs less than £12,000 would not benefit from this.

In addition changes to Stamp duty for commercial property were announced, as follows – The way stamp duty on freehold commercial property and leasehold premium transactions is calculated will change. Currently, these rates apply to the whole transaction value. From 17 March 2016 the rates will apply to the value of the property over each tax band.

The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000; 2% between £150,001 and £250,000, and 5% above £250,000.

Buyers of commercial property worth up to £1.05 million will pay less in stamp duty.

Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.

 

Reforming Business Rates appeals – “Check Challenge Appeal”

The Department for Communities and Local Government is currently considering the responses to the consultation period regarding this proposed new procedure in the rating system.

It is widely acknowledged that the current Business Rates appeal system is widely open to abuse and is in need of improvement and DCLG’s attempt at improving this is the Check Challenge Appeal process.

The basic principle is a 3 phase approach:

1 The ratepayer or their adviser checks the way in which the valuation in the rating list has been arrived at, including physical details.

2 If the make-up of the valuation is considered to be wrong, then this can be challenged with the Valuation Office and if the VO considers the challenge to be reasonable then they will either take steps to amend it or the right to appeal is granted.

3 An appeal can be made if it is deemed that valid grounds exist.

Under the proposed changes there would be only one opportunity per ratepayer per rating list to make such a challenge.