Double whammy stings executives into action

Double whammy stings executives into action


For large corporate businesses, the non-domestic rates levy is just another cost of doing business in the UK. Until recently, it was rare for individual corporate executives to publicly express concern.

After all, griping about tax invites accusations of profiteering and tax avoidance – bad news for a carefully nurtured brand. So, for senior executives of John Lewis Partnership, Alliance Boots and Morrisons to publicly express dismay at the exorbitant cost of business rates confirms that non-domestic rating is high on the corporate agenda.

2013 tax hike

The 2.6% year-on-year increase in the Retail Prices Index for September is likely to feed straight through to 2013 rate demands, meaning that for every £1 paid in 2011, businesses will be paying in excess of £1.13 in 2013. In a stagnant economy, this brutal assault on property owners and occupiers will have long-term repercussions for expansion and investment.

Adding insult to injury, the Chancellor’s deferred payment scheme for some business ratepayers now appears inconsequential when compared to the effect of delaying the 2015 property revaluation process until 2017. This decision extends the period under which rate demands are calculated based upon unrepresentative pre-recession valuations. It ensures that ratepayers will wait a further two years before seeing the positive effect on rate demands of a falling rental market.

Development and investment

Businesses large and small are paying for the deficit through the business rates system. If the Prime Minister needs to get business back on-side for long term sustainable growth, his current Chancellor’s treatment of property developers, owners and occupiers is falling a long way short.

This article is part of the autumn 2012 edition of Rating in Brief.

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