Firms face two per cent Business Rate Rise
Business owners may face a higher tax bill following the introduction of new regulations which give local authorities the power to increase business rates by up to two percent of rateable value.
From April 2010 local authorities will be able to top up business rates for properties with a rateable value of more than £50,000, in order to help fund local economic development.
Introduced under the Business Rate Supplements Act, the new law are more likely to affect medium-sized firms than smaller businesses, because of the high property value threshold.
According to Department of Communities and Local Government (CLG) spokeswoman, Sarah Southerton, the supplement will be a maximum of two per cent of rateable value.
“Although there will be consultation with local businesses, it will be at the discretion of the council whether or not they introduce it,” she said. “However, if the tax funds more than a third of the total costs of a development project, businesses will be invited to vote on the proposed development.”
Southerton added that most councils will use the top-up tax.
“The local authorities are likely to use this power, as it is about making sure councils and communities are able to make the most of the recovery when it comes.”
“It may not be implemented in every area, because it will be for each authority to consult with local businesses and decide whether it is right for their particular area or project.”
British Chambers of Commerce senior policy adviser, Kevin Hoctor, said that the rate supplements would only be successful if those businesses affected were able to vote on each proposal.
“Businesses might want to contribute an additional amount on their business rate in order to fund a big local infrastructure project that they think is of real economic benefit, but we don’t want local authorities to use the tax to invest in something that doesn’t have any benefit for the businesses.”
“Local authorities might have a consultation, but if businesses in that area don’t want that supplement to go ahead there isn’t anything that is going to stop it.”
For more information about how business rate values are calculated, visit the Valuation Office Agency.