Owners and occupiers of commercial properties in England and Wales will have to wait for the help towards business rates promised by the chancellor the Telegraph reports. In his Autumn Statement on November 29 George Osborne announced plans to alleviate the burden on Small and Medium Enterprises (SMEs) caused by the biggest rise in business rates for over 20 years. The relief scheme was due to commence in April 2012 when the rises come into effect but it now appears help will not be at hand until much later in the year.
Business rates, or National Non-Domestic Rates (NNDR) – are levied on all commercial properties. The amount payable is based on a calculation of the rateable value of the property and a variable multiplier. The rateable value is based on factors such as the size and location of the property and is set every five years. The multiplier is determined by the Retail Price Index (RPI) and changes in line with inflation.
Currently owners and occupiers of commercial properties with a rateable value of less than £18,000 (£25,000 in London) are eligible for small business relief. The amount of relief varies accordingly with properties with a rateable value of less than £6,000 being exempt from business rates.
This 100% relief was introduced as a temporary measure in October 2010 and extended for a further year in the last budget. In his Autumn Statement the chancellor promised a further extension until April 2013. He also pledged to introduce a deferral scheme to help soften the blow for other businesses and estimated that one third of commercial properties would see their business rates reduced as a result.
Although some business leaders expressed disappointment that the chancellor had not gone far enough the news was broadly welcomed by SMEs. Now it seems that businesses will still have to pay April’s rise which, using a multiplier based on last September’s RPI, comes in at 5.6%. This is because the Department for Communities and Local Government (DCLG) which administers changes in business rates legislation hasn’t been able to launch the scheme in time.
The DCLG has told local councils that they will have implement the rises with no relief available until late in 2012. Business rates specialists warn that this will result in confusion with commercial properties receiving a number of bills and then having to engage in a complicated process to claim refunds. Jerry Schurder head of ratings at Gerald Eve told the Telegraph: “It will be October to November before they start implementing it so businesses will have to pay the full increase to start with and then each one will have a claim to make.”
While this should not affect commercial properties currently enjoying a 100% exemption it will be disappointing news for owners and occupiers higher up the sliding scale. For these people, they were hoping that the lessening of the business rate burden would herald a bright start to the New Year.
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2012 Commercial Property Outlook
