Written by: Keith Tully
Published: 9th April 2015
The decision taken by the UK government recently to defer the process of revaluating business rates is set to cost companies outside of London billions of pounds over the next two years.
That’s according to the commercial property advisors of Bilfinger GVA, who are convinced that the deferment will disproportionately impact businesses operating in the Midlands and the North of England.
Indeed, the firm expects the retention of business rates at existing levels will cost companies in the Midlands and the North in the region of £2.3 billion over the next two years.
In the same period, expectations are that companies in the East of England, the South East and the South West will lose out on a combined total of £640 million in potential savings.
Meanwhile, in and around the capital, companies in London are actually expected to benefit from the decision to defer the revaluation of business rates by as much as £1.5 billion over two years on a collective basis.
A revision of business rates had been scheduled for April 1st 2015 but that date has now been pushed back by a full two years.
According to analysts at Bilfinger GVA, while businesses in London will benefit financially during the next 24 months, they will “be hit very hard” when the deferred revaluation is eventually carried out in 2017.
“The government has responded to growing calls across the business community for what it terms a ‘root and branch’ reform of the business rates system,” said David Jones, a senior director of Bilfinger GVA’s business rates team.
“However, it is important to remember that the government is committed for any changes to be fiscally neutral, so any major reforms to the system will still create winners and losers.
“They are very much responsible for much of the controversy over the current system for delaying the revaluation from 2015 to 2017. Our research clearly highlights the regions and sectors that have paid the highest price for the delay.”
Bilfinger GVA suggests that the current business rates system in England is based on decisions made on the subject in 2008 and when the national economy was in a state of crisis. Its suggestion is that while changes are needed to the current business rates structure, those adjustments should be focussed on creating a fairer system than the one currently in place.