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A B C D E F G H I J K L M N O P R S T V W Y

Business rates revaluation could boost Northern economy

Business rates revaluation could boost Northern economy

Monday 6th March 2017

The controversial business rates revaluation could encourage companies to swap premises in the South East for sites in the North, according to commercial law firm Brabners.

From next month, the government will adjust the rateable value of business properties to ‘reflect changes in the property market’. Rates are currently set according to the open market rental value of a property on April 1st 2008.

Critics of the revaluation say that it will lead to unsustainable tax increases in areas where property values have risen significantly, such as the South East.

Richard Roberts, partner and head of the retail sector at Brabners, said: “Ultimately, I think April’s changes will amplify a trend we’re already seeing – firms moving to the North. Most northern locations will see a reduction in business rates and even “hotspot” locations in the North – such as Manchester - will only see business rates increase by around 9 per cent, which is manageable for most. But the rise will be far more dramatic in the South East where Reading, for example, is looking at a 70 per cent hike.

“Major organisations such as RBS and the BBC have already relocated large parts of their operations to make the most of lower running costs. April’s revaluation is going to make Northern cities an even more attractive proposition for businesses of all sizes.”

However, Richard highlighted that the alignment of business rates to property value puts SME retailers at a severe disadvantage.

He said: “The real problem arises for businesses that can’t easily move away from locations where rates rises make trading unsustainable. National retailers, with multiple branches, have the flexibility to exit those locations without a significant impact to their estate. Retailers with a small number of outlets, and that rely on high-street footfall, might be put in a more difficult position by the new rates.”

“This disadvantages those that need to be based in desirable locations. Many retailers argue that a turnover-based system would be fairer. However, this would be a much harder system to administer and I doubt we will see such a radical change announced in the Budget.

“The extent of the increase or decrease in rates is going to differ greatly depending on location. In places that are due the biggest rises, businesses will be hoping for some form of reassurance from the chancellor that they will be protected.  There is evidence that the government is considering additional measures to reduce the impact of the revaluation (beyond those already proposed), although no indication has been given of what this additional transitional relief might look like.”

Ends

Issued on behalf of Brabners LLP by Citypress.

Media information:
Sophie Millward / Bryn Madden
Citypress
T. 0161 235 0300 / E. sophie.millward@citypress.co.uk / E. bryn.madden@citypress.co.uk