Rural business rates rise ‘must be reduced’

Pressure is mounting on the government to reduce the effect of business rate rises from April.

Farming and other rural business groups are calling on the chancellor, Philip Hammond, to take action in next month’s budget.

The rises come after a rates revaluation of all commercial properties by the Valuations Office Agency (VOA), the first for seven years after the review was postponed in advance of the last general election.

As a result, livestock markets in England are facing an average increase of 86% in rateable values. Other rural businesses looking at steep increases in rates include farm shops (up 35.6% on average), agricultural showgrounds (+25%), theme parks (+28.9%), tourist attractions (+38.2%) and self-catering holiday homes (+44.9%).

See also: Q&A: Business rate valuations appeal process explained

However, the VOA says rates will fall for 920,000 businesses, remain the same for another 420,000, and increase for 510,000 across the UK.

“Many farm businesses that have tried to make up for falls in income by diversifying are now seeing their efforts wiped out by this rise,” said Farmers’ Union of Wales head of policy Nick Fenwick.

The union has urged businesses to contact their MPs and AMs about the rises. The Institute of Directors has also called on the chancellor to raise the threshold so that companies in premises worth up to £100,000 get tax relief.

The government is under internal pressure too because many of those facing steep rises live and work in traditional Tory seats.

The new appeals system makes it harder to challenge – and increases the initial cost of a challenge. It also changes from a two-stage to a three-stage process this year. However, there are already 280,000 unresolved appeals in the system from the previous revaluation in 2010.

The rates system is flawed and in urgent need of review, said the Country Land & Business Association (CLA), which has set out an action plan for treasury ministers.

“Rural businesses are suffering because of a clumsy and unfair rates system,” said president Ross Murray.

In a letter to treasury chief secretary David Gauke, the CLA set out steps that could be taken immediately to avert the crisis, including:

  • Remove the cliff edge – businesses that were exempt under the 2016 Small Business Rate Relief (SBRR) should remain exempt under the 2017 scheme even if their new value takes them over the threshold
  • Remove the ban on businesses with multiple properties qualifying for SBRR
  • Remove the requirement to pay for appeals for those worst affected
  • Remove rates liability for empty buildings in rural areas
  • Get valuations in rural areas right first time by ensuring they are based on local circumstances and not on regionally estimated benchmarks.

Scots cap rises for key sectors

The Scottish government has sought to limit the effect of business rate rises on the hospitality sector and people with selected renewables enterprises.

Finance secretary Derek Mackay has announced a package of measures to support a range of businesses facing a sharp increase in their rates as a result of the UK-wide revaluation process. For the renewables sector, this means bill increases will be capped at 12.5% for small-scale hydro schemes (up to 1MW). The government will also offer a new 50% relief for district heating schemes and roll forward current rates relief, up to 100%, for qualifying community renewables and new-build schemes. There will also be a 12.5% cap on 2017-18 bill increases for pubs, restaurants and cafés – including those in rural areas.

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