Market Insight

Autumn Statement – more like an understatement!

November 24, 2016

It may have been hotly anticipated by businesses and those managing commercial property alike, but yesterday’s Autumn Statement from ‘the accountant’, Chancellor Philip Hammond, is probably best left forgotten.

Indeed, we were somewhat pleased to hear it would be his last Autumn Statement…until Spring at least!

Why, you ask?

Well when it comes to business rates issues, it was less of a statement, more of an understatement.

Many had been hoping for some clarification around the business rates ‘Check, Challenge, Appeal’ process but instead, business rates were merely paid lip service through changes which, in our opinion, are likely to have little overall impact or benefit for business.

What has changed?

  • Digital infrastructure

Yes, there was an exciting new 100% business rates relief for full-fibre infrastructure from 1st April 2017 for 5 years, but whilst this will benefit some businesses, its limited roll out is unlikely to relieve many companies of the tax burden.

  • The multiplier

The Uniform Business Rate or UBR multiplier was also amended slightly, to make the national non-domestic multiplier 46.6p – 0.1p less than two months ago. The supplement for larger businesses will remain the same, and will result in a multiplier for larger businesses of 47.9p.

  • Rural relief

To help overcome the inconsistency between rural rate relief and small business rate relief, Hammond announced the doubling of the rural relief to 100% from 1st April 2017.

Again, whilst this is likely to help some small businesses in the countryside, it represents more of a positive gesture by Government, than anything else.

  • Transitional arrangements

The transitional relief cap will go from 45% next year, to 43% and from 50% to 32% the year after.

Yes, it looks good on paper and seems, on the face of it, as though Government has listened to feedback from the business community. However, the reality is that this is likely to have little overall impact on a company’s business rates bottom line.

In fact, the compounded increases represent a potential 90% overall increase which, along with inflation, nigh on doubles liabilities in the first two years.

Such stifling increases could spell the end for many smaller businesses which will struggle to pay this burdensome tax.

Disappointing understatement

Yesterday’s announcement on business rates in the Autumn Statement represented more of a tinkering than anything else, and failed to address the big issue in business rates at the moment – that of 2017 Revaluation and the ‘Check, Challenge and Appeal’ process.

With just five months to go until Revaluation, there remains a great deal of uncertainty around this process for businesses and commercial property advisers alike.

What is an already complicated minefield of rates and exceptions is fast becoming a farce. Unless Government can provide some immediate clarification around the ‘Check, Challenge and Appeal’ process and the way in which a valuation tribunal will reach their decisions, it is impossible to tell what will happen.

What we can expect, however, is the challenge process to become even more complicated for businesses, which already suffer the burden of a fine for any incorrect information within their appeal.

And the chances of incorrect information being taken forwards by the Valuation Office Agency or VOA increase substantially if businesses follow their advice and contact them to confirm the details of their valuation now.

Following years of experience in this area, the advice of our business rates consultants is to speak to a surveyor first.

This will ensure that the valuation information taken forwards by the VOA is correct, and that you avoid any fines during the appeal process further down the line.

For expert advice to help reduce your business rates liabilities, don’t hesitate to contact our team of business rates consultants for more information.