2015 Revaluation postponed until 2017: GL Hearn's view

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19 October 2012

The Local Government Minister announced yesterday that the 2015 Revaluation has been postponed until 2017.

The Minister (Brandon Lewis) said:

"I am today announcing the Government’s intention to postpone the next business rates revaluation in England to 2017. Primary legislation will be brought forward through the Growth and Infrastructure Bill which will shortly be laid before Parliament. Business rates are the third biggest outgoing for local firms after rent and staff costs. This decision will avoid local firms and local shops facing unexpected hikes in their business rate bills over the next five years."

Commenting on this Blake Penfold at GL Hearn said: "This announcement comes as a surprise as regular revaluations, every five years, have been a feature of the modern business rates system since 1990. Current economic and property market circumstances are strongly adverse and the Government is obviously concerned about the effect of these on it business rates income which is about 5% of all tax revenue.

Many businesses will not welcome the postponement of the 2015 revaluation as it promised some measure of relief in respect of current rateable values that are significantly above rents.

The decision appears to be motivated by concerns about government income and in reality does nothing to address the issue of current unaffordable levels of business rates.

Instead of cancelling the revaluation the government should take action to address two factors. The first is to reduce the very high level of business rates – we estimate these are likely to rise to over 47% next year, making them the highest level of corporate tax in the UK, and amongst the highest levels of local property tax in the European Union. The second action should be to review the RPI linkage to the business rates tax "take". This link means that every year, with or with revaluation, the Government takes out of the property sector more tax by way of business rates. Real property represents a declining proportion of the total economy and it makes little sense to keep increasing the tax take from it. Neither of these factors will be addressed by today’s announcement."

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This announcement comes as a surprise as regular revaluations, every five years, have been a feature of the modern business rates system since 1990. Current economic and property market circumstances are strongly adverse and the Government is obviously concerned about the effect of these on it business rates income which is about 5% of all tax revenue
Blake Penfold

GL Hearn

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