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UK Property Bodies Call For Business Rates Reform

by Robert Lee, Tax-News.com, London

14 December 2015


Reducing the burden of UK business rates (property tax) could "unlock" almost 4,000 jobs and GBP1.75bn (USD2.7bn) for new commercial property development, according to a new report by the British Property Federation, British Council of Shopping Centres, and the British Council for Offices.

The business organizations said that, over the past three years, increases in business rates may have led to the economy missing out on as much as GBP670m for new developments. It may also have resulted in the creation of 6,000 fewer jobs among occupiers of property, they said.

The report calculated that over a period of two to three years, approximately three-quarters of any increase in business rates is transferred to landlords as occupiers push for lower rents. It said that by effectively limiting the rents landlords are able to charge their occupiers, business rates reduce the potential level of real estate investments landlords can make and reduce the amount of new commercial property development.

The organizations recommended that more frequent property revaluations would make the tax fairer, by ensuring that rates are based on up-to-date market conditions. Revaluations are currently carried out every five years.

Ion Fletcher, Director of Policy (Finance) at the British Property Federation, said: "Business rates are often seen as a cost for occupiers – one that gets in the way of growing their businesses. This research shows that business rates also harm landlords and in particular they discourage new, economically valuable development."

"The Government's desire to maintain a high level of income from business rates – although understandable – means we are missing out on opportunities to provide new jobs, skills, and growth in various sectors of the economy, not least construction and retail."

TAGS: tax | investment | business | property tax | United Kingdom | tax reform | construction | retail | trade association | trade

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