Commercial surveying news from the Beattie Partnership

Budget 2016: The Ups, and Possible Downs, of Business Rates Reform

The Chancellor has spoken and 600,000 small businesses will be taken out of business rates from 2017. The Federation of Small Businesses is happy. George Osborne certainly sounds happy too. So is there a downside, or is this a real ray of sunshine amid the uncertainties of market turmoil and the darkening clouds over the global economy?

Well the facts do seem to speak for themselves: the business rates relief threshold will go from £6,000 to a maximum of £15,000; the higher rate threshold from £18,000 to £51,000. According to the Chancellor, 250,000 small businesses will pay less, on top of the 600,000 exempted by the basic relief threshold rise.

There may be losers in other areas however. Certainly local authorities have expressed concern that ultimately they will lose valuable revenue towards paying for their services. This concern has been echoed by charities.

Along with these changes is a plan to make business rates revaluations more frequent, becoming three-yearly instead of the current extended seven-year interval between them. This should mean that rateable values for businesses more accurately reflect the actual, current rental values of business properties. However, it also leaves them more at the mercy of the volatility of the property market. In the long-term, with property values rising, this could mean more small businesses, in certain areas, actually finding themselves once more within the rates payable threshold.

What it boils down to is small companies need to be sure of the advice they’re getting when it comes to business rates, particularly if they are just above or below the new threshold. They may also, in time, have to weigh up the advantages of the location they’re in for trading purposes against the potential disadvantage of rising property values leading to them coming back into paying business rates.

In business the future is never certain; with business rates in part it now is, but the longer view brings up certain questions and requires a degree of forward-thinking.