The Chancellor has made some bold moves in his 2016 Budget that ostensibly favour small businesses. George Osborne is claiming that his changes to business rates could save small firms around £6,000 a year, with 250,000 of them paying less, with 600,000 being taken out of business rates altogether.
Osborne is permanently raising the threshold for small business rate relief from £6,000 to £12,000, rising to a maximum of £15,000. In addition, he will increase higher rate relief from £18,000 to £51,000. The Federation of Small Businesses is happy with the change, naturally. Representatives of local government and charities are less so, because it may mean a drop in revenue for local authorities and, consequently, their ability to pay for their services
But, even from a business perspective, the changes could have other implications besides saving small businesses money. Paul Giness, business rates expert with The Beattie Partnership, in Manchester, has this to say, “Businesses will need to take proper, sound advice if they’re hovering close to the relief threshold, to ensure that they’re in the right place”.
He also raises a note of caution, “The proposed move to three-yearly valuations to keep up with changes in property values could also be troublesome for small businesses, depending on their rental value at the time of assessment and how it relates to the relief threshold”.
Fundamentally, change can be beneficial but it also can bring with it less stability. While a more frequent round of valuations should more accurately reflect actual property values, this itself is likely to result in some businesses no longer qualifying for the lower threshold of business rates relief.
As Paul explains, “For some small businesses currently near the new threshold limits they should be aware the revaluation next year could change their valuations either downwards but also potentially upwards, if they are in a growth area. This is because the new revaluation reflects changes in rents between 2008 and 2015. The picture should be clearer in October this year when the draft Rating List will be published and businesses can review any prospective rates liability moving forwards”
The dilemma in terms of location versus expense exists for many businesses, but with the next revaluation upon us, there are still more questions than answers.
If you would like to discuss how business rates changes could impact you, please call The Beattie Partnership on 0161 228 2224.