The Government revaluation was due to take place in 2015 but a two-year delay has been announced in a move it says will provide "tax stability" to shops and businesses.
However, criticism has rained in from numerous business groups as they were expecting the 2015 revaluation to result in reduced business rates.
At present, business rates – often charged on most non-domestic premises - represent the third-largest outgoing for small businesses after rent and staff costs.
The two-year abstention is likely to see companies paying over the odds on their rates as they are based on out-dated property values.
Jonathan Munnery, Director at Cooper Williamson, said:
“Current business rates are based on 2008 valuations when they were at their highest and they need to change to reflect current levels. We see businesses struggle for a number of reasons but plenty will suffer now simply because the Government are moving the goalposts. It’s another kick in the teeth, particularly for small to medium sized businesses.”
Stuart McCann, of property law specialists Pinsent Masons, agreed:
“Businesses would have legitimately expected their rates liability to reduce had the 2015 revaluation gone ahead as planned, as the new rates would have been based on April 2013 rental values. Currently, businesses are paying higher rates than reflect present economic conditions and, in some places, this has led to the rates liability exceeding the rent.
“This imbalance has been created because the amount paid is based on a valuation that took place in April 2008, prior to the significant drop in rental levels that has occurred in most locations since then. Practically, what this new announcement means for businesses is that they will continue to pay higher rates for longer, which will place an unexpected and additional financial burden on them in continuingly difficult trading conditions."
Further support for businesses came from Jerry Schurder, head of rating at consultants Gerald Eve:
“This is awful news for retailers especially and it is preposterous to claim that this provides any real benefit to businesses. Business rates are already far too high and are a cause of hardship and vacancies in the high street, because bills are based upon pre-recession rents.”
The delay will apply to properties in England, with no announcements yet made on the revaluations in Scotland, Wales and Northern Ireland that are also due in 2015.
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