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Energy Efficiency: Is it Catch-22 for Business Rates?

Energy Efficiency: Is it Catch-22 for Business Rates?

The environment is the place we work in. A business environment might be offices, or retail space, a factory or workshop, or a school. For many businesses, their environment is key to their success, and managing it is a crucial means of maintaining both productivity and profitability.

Environment can also refer to the wider, natural world, the bigger picture. How business impacts on the environment is an increasingly prominent, and urgent, issue.

The two environments – working space and the natural world – overlap when it comes to business accommodation.

“On the one hand, businesses need the right environment in which to function,” advises Don Beattie, Senior Partner at Manchester-based, Chartered Surveyors, The Beattie Partnership.  “On the other, they need to meet certain demands to be environmentally compliant.”

 

Don Beattie - The Beattie Partnership

Don Beattie

 

“How you run your building affects the environment, but it can also affect your bottom line,” “In other words, environmental compliance isn’t just about following the rules, but also making your business more efficient.”

However, Don also points out that while energy efficiency can be beneficial, it may have an impact on the business rates payable.

 

The Solar Energy Issue

While energy efficiency is a key element in making businesses more environmentally-friendly, there are issues around the potential expenses incurred in making yourself more energy efficient.

The Valuation Office Agency (VOA) will now use two different methods to calculate the value of solar power when installed as rooftop panels. One is where the solar-generated electricity is used mainly for export; the other is where it is used mainly for self-consumption.

 

“Where over 50% of the solar-powered electricity is exported, in other words, a building’s tenants benefit from it, or it goes back into the grid, or to a third party, then generally the rateable values will reflect this”

Don Beattie, The Beattie Partnership

 

However, the same does not apply where the power is used mainly by the building’s owner. Here, proposed business rates are likely to be much higher.

“if under 50% of the solar energy is exported, then the building’s owner is deemed to be benefiting from it to the extent that the rooftop solar panels are then an addition to the value of the whole property,” Don explains.

As things currently stand, rates exemptions will be removed from small, non-domestic solar installations, and larger systems could face a 600% to 800% hike in business rates.

 

Making the Environment Work

“Businesses must look at the whole picture when it comes to energy, waste and what they invest in it,” Don says.  “There is a strong case for businesses to run their buildings as efficiently as possible when it comes to energy and other consumption, such as water.”

 

“The potential for a huge hike in rates resulting from solar energy, raises questions about how far a business should go with its energy efficiency measures”

Don Beattie, The Beattie Partnership

 

“It seems like a big catch in the argument, if putting energy efficient initiatives in place will result in costlier rates,” concludes Don.

To discover how your energy efficiency could impact your business rates, please call The Beattie Partnership on 0161 228 2224 or visit bepart.co.uk/our-services.