The Federation of Small Businesses has been very positive in its response to the Chancellor’s 2016 Budget proposals for business rates. This is understandable as George Osborne claims that by raising the threshold of business rates relief some 600,000 businesses will no longer have to pay business rates in 2017. However, there are potentially negative consequences.
Local authorities will lose revenue at a time when many of them are deeply concerned over how they can continue to fund their services. And while protective measures have been assured, there is not yet a guarantee of how long they will remain in place.
Alongside the changes to business rates relief is a plan to implement three-yearly rates revaluations, which might suggest the next one will take place in 2020. It is possible it will only affect subsequent revaluations but this will be confirmed by the government shortly.
Paul Giness, business rates expert with Manchester-based, The Beattie Partnership, observes that, “The changes mean that small businesses need to be very clear where they stand. If they’re close to the threshold, either just below or above it, they must take good, sound advice about the future implications for them”.
More frequent revaluations, set against a backdrop of continued rises in property values, are likely to take numbers of small businesses above the rates relief threshold eventually.
There are also potential consequences when it comes to rising rents. Paul explains, “It may be that for some landlords if a business is no longer liable for rates it has more to give in terms of rent. This is by no means inevitable, but it’s certainly possible in some scenarios”.
Certainly, just as the Chancellor’s business rates reforms give some definite answers, they also raise future questions. Change brings with it a certain amount of as yet unknowable possibilities.
Paul concludes, “There are uncertainties despite the positive nature of the Budget changes, and it’s our job to steer people through them with the best professional advice we can offer”.
For a clearer picture of how business rate changes may affect your company, please call The Beattie Partnership on 0121 228 2224.
If you would like hear more of Paul Giness’ views on this issue, please read his LinkedIn post, Business Rates: Will 600,000 Businesses Be Lucky?