Ask any business person who either owns or rents a commercial property and you will not find many positive comments about this extremely arbitrary and unfair property tax.
Business rates are levied on all commercial properties across the UK. They are calculated on a system which takes into account the perceived rental value of the premises (called the rateable value or ‘RV’ for short) and a multiplier is used to calculate the actual rates payable.
This multiplier carries, broadly speaking, two rates – a small business and standard rate and is arrived at on the rental value of the property as mentioned previously.
The unfairness of the system is that no account is taken of the actual ability of the business to pay.
So you could have a business making excellent profits but which only needs relatively modest offices, paying less than a small retailer who is just managing to break even but has to occupy ‘valuable high street premises’ to ply his or her trade.
Much has been made in the press and by various lobby groups about how the independent high street retailer is burdened by this tax and indeed they are right. In some areas the rates bill is the single biggest overhead for small retailers.
What does the business owner get in return for this extra layer of overhead? Nothing I am afraid. ‘Surely you get your bins emptied?’ I here you ask... Wrong – you have to pay for that yourself with a private waste carrier – oh, and there’s a £5,000 fine waiting for you if you don’t.
During the credit crunch some of the big corporate landowners actually tore off the roofs of their empty factory units because that was a cheaper alternative than paying the rates bill.
And there we have an even more ridiculous situation – even empty properties, with no business generating money in them, is taxed.
The system is, I am afraid to say, even more inequitable than this. The rates bills are based on the average rental value of your property every five years.
So in 2010 rateable values were revalued from their 2005 levels, but they are based on the value two years previously – so your 2010 bill was based on 2008 values, with your 2005 bill based on 2003 levels.
But what happened in 2009 – the biggest slump in property prices and rents since the 1970s, so there you were paying rates based on the buoyant levels of 2008 in post credit crunch 2010!
Now even better news is yet to come – at least when the next rates valuation comes in 2015 we will be paying the 2013 levels so it will even out. No, no, no, no, silly business person – the 2015 valuation will be carried out in 2017!
I can see those goalposts gyrating all over the football pitch.
Cllr. John Rankin
Hastings Borough Council
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