PKF Bemoans UK Business Rate Changes

by Jason Gorringe, Tax-News.com, London

28 April 2008

Changes to the rules governing business rates on empty properties could severely hit SMEs, tax experts at PKF accountants and business advisers have warned.

The changes, which came into effect at the beginning of April, effectively abolish financial relief paid to owners of empty commercial and industrial premises.

“Whereas before 1 April commercial and retail properties enjoyed full relief for the first three months and 50% relief thereafter, this has now been capped,” explained Peter Harrup, PKF partner and corporate tax specialist, adding that:

“After an initial three-month rate-free period, owners will now find themselves liable for the full basic occupied rate on their empty buildings.”

The reform also affects empty industrial properties – these are now liable for full business rates after six months, whereas previously their owners benefited from full rate relief, no matter how long they remained vacant.

“Government reasoning sees the move as a way to increase business competitiveness and efficiency by incentivising landlords to re-let or redevelop their properties,” Mr Harrup observed, going on to state that:

“It also hopes to shift the focus for business development away from green-field to brown-field sites."

“While the thinking behind the changes is laudable, the result could be hardship for many small business owners who now, with the abolition of Empty Property Relief, will have to fork out hundreds, if not thousands, of pounds."

“It’s yet one more financial pressure for business, coming at a time when industry and commerce is feeling the pinch of a faltering economy,” Harrup concluded.

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