A leading business rates adviser has warned that much of Scotland Plc is in for painful increases in business rates which will be accentuated by the Government's shock decision announced yesterday to scrap transitional relief - where larger increases in bills are phased in.Ken Thurtell, Senior Partner in Scotland of leading business rates advisor Gerald Eve also warned that public sector buildings and the petrochemical and energy sectors are likely to see the biggest rises in business rates.
All non-domestic properties pay business rates based upon the Rateable Value (RV) of their premises as assessed by the local government assessor. These assessments are updated every five years in line with changes to property rental values with the new revalued assessments being used to calculate rates bills from 1 April. The Scottish Government had previously announced that the Uniform Business Rate (UBR), i.e. the tax rate which is multiplied by the RV to give the rates payable, will be 40.7p per £ in 2010/11 (small and medium businesses) and 41.4p (large businesses).
However, although Scottish Assessors completed their valuations last Autumn they had not been released until yesterday much to Scottish commerce's frustration. They are now available at www.saa.gov.uk and for the first time Scottish businesses will be able to calculate their rates bills from 1 April.
Glasgow- based Thurtell said: "The new Rateable Values will come as a huge blow to many businesses. Many businesses are going to see much greater increases and will face increased bills despite the 15% UBR fall from 2009/10.
"Gerald Eve's initial analysis of the 2010 assessments shows that the petrochemical and energy sectors will be amongst the hardest hit as well as the public sector such as hospitals and schools." For example, the largest single assessment in Scotland, BP's Sullom Voe terminal will witness a RV increase of nearly 50%. Utility networks are other losers as a result of this revaluation with some experiencing a doubling in assessment.
But Thurtell said the biggest shock is that the Government has abandoned its approach of the last 20 years of phasing in the larger increases in bills. At the last revaluation in 2005 the Government explained its reasoning as: "Following the 2005 Revaluation those properties whose rateable values increase by more than the Scottish average of 13.3% will be faced with increases in their bills and some may be significant.
The aim of transitional arrangements is to protect ratepayers who occupy such properties from sudden sharp increases in their bills in the period immediately following the revaluation, allowing them time to plan to accommodate the true bill over a longer period."
Thurtell slammed the Scottish Executive for abandoning this approach for 2010. "In the absence of any statement to the contrary from the Executive, businesses have quite reasonably been assuming that the policy since 1990 of phasing in revaluation changes would continue and the maximum increase next April would again be held at 12.5%. It is simply unacceptable for the Government to announce less than 50 days before the new rates bills become payable that there will be no limit on the increases to be faced."
But Gerald Eve said there was some good news for smaller enterprises. The Scottish Executive announced the continuation of the Small Business Bonus Scheme that exempts around 65,000 small businesses from paying rates. In addition, Gerald Eve welcomed the announcement that the Scottish Executive have announced a new rates relief scheme for the renewable energy sector that will see many small renewable projects exempt from rates from 1 April 2010.
Source: BLI Financial