Business rates change ‘must be adequately funded’

19 Jun 19

Councils have warned that reforms to increase the frequency of business rates revaluations must be properly resourced and contain measures to manage the impact on appeals.

New legislation will see property revaluations in England take place every three years, instead of the current five, and the next revaluation brought forward from 2022 to 2021.

Local government minister Rishi Sunak said the move would ensure estimates reflected property market values and maintain fairness by redistributing the total amount payable across the country.

“We’ve listened to businesses asking for more frequent revaluations and are now acting so their bills will more accurately reflect current property values,” he said.

“By bringing forward the next revaluation to 2021, we are making sure businesses can benefit from the change as soon as possible.”

The commitment to introduce more frequent revaluations was announced in the Autumn budget of 2017, while the bringing forward of the 2022 revaluation was included in last year’s Spring Statement.

Legislation to bring in three yearly revaluations for business rates north of the border was introduced in the Scottish Parliament in March.   

However, the Local Government Association warned that councils were already grappling with a backlog of appeals dating back almost a decade, and said adequate resources would need to be provided for the new regime.

“It is essential that the Valuation Office Agency and other relevant organisations are properly resourced for more frequent valuations and that the issues with appeals still need to be sorted out,” said an LGA spokesman.  

Around £2.6bn is held in provision by councils for revaluation appeals, mostly in relation to the 2010 revaluation for which 55,000 appeals are still outstanding.

“These are resources which could be spent on local authority services which are already under severe pressure,” the association said.

But local authorities in London called for the government to go further and introduce yearly revaluations as part of a fundamental reform of the system.

“We think government should be more ambitious and bring in annual revaluations,” said a spokesman for London Councils.

Many businesses in the capital had been hit by rate increases of as much as 45% overnight in the last revaluation, which came into effect in 2017, with London businesses as a whole facing a collective business rate hike of up to £1.2bn, he said.

“This is clearly a system that is not working for businesses or local councils,” he said.

“We need a system that is more responsive to local needs, reflects the broader context of business taxation and provides a stable funding stream for local government that incentivises growth.”

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