The Government’s two-year deferment of the business rates revaluation will cost businesses in the North of England and the Midlands £2.3bn, according to new research by Bilfinger GVA.
The commercial property advisor has carried out a review, calculating what the 2015 revaluation would have looked like if it had taken place when it was originally due on April 1, then comparing this to what businesses will instead have to pay over the course of the deferment.
Current rating liabilities are valued against the backdrop of the market in April 2008, just before the onset of the economic downturn – a level that large swathes of the market are still yet to return to.
As a result, the current rating system has been described as being disconnected from the economic landscape, leaving businesses crying out for changes to create a fairer system.
The Bilfinger GVA review – entitled April Fools’: The rating revaluation that never was – contains a number of key findings, including the fact that the deferment of the 2015 revaluation will cost business in the North and Midlands £2.3bn, while saving London £1.5bn.
However, the report also found that London businesses can expect to be hit very hard when the deferred revaluation is carried out in 2017.
The 2015 uniform business rate would have been 54.5p, with RPI increases taking it beyond the unchartered 60p barrier by year five of the valuation cycle.
The findings also suggest that over the same period, it will cost the East of England, South East and South West an additional £640m.
Bilfinger GVA forecasts that the 2017 revaluation uniform business rate will rise to 51.2p, with rateable values 3% lower across England compared to 2010.
It will be the first time for 22 years that the multiplier will not fall because of the revaluation.
The review claims a lid must be kept on business rates, which represents the highest rate of any major tax.
The Government must change from RPI to CPI-linked uplifts to stop the inexorable rise of this tax base.
David Jones, senior director in Bilfinger GVA’s Business Rates team said: “The Government has responded to growing calls across the business community for what it terms a ‘root and branch’ reform of the business rates system. However, it is important to remember that the Government is committed for any changes to be fiscally neutral, so any major reforms to the system will still create winners and losers.
“They are very much responsible for much of the controversy over the current system for delaying the revaluation from 2015 to 2017. Our research clearly highlights the regions and sectors that have paid the highest price for the delay.
“By switching to a CPI-linked system, committing to more frequent valuations and scrapping downward transition from 2017 for those businesses that have been hardest hit, any future Government could make huge strides towards redressing the imbalances in the system, and reducing an increasingly disproportion burden on growth and job-creating enterprise.”