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Viewpoint - 29/01/2014

Government's tentative steps towards rates reform an admission of failure of current system

The Government’s confirmation this morning that it is introducing business rate incentives for smaller retailers is an admission of serious flaws in the current system for taxing commercial property.

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The government’s confirmation this morning that it is introducing business rate incentives for smaller retailers is an admission of serious flaws in the current system for taxing commercial property.

Richard Wackett, our National Head of Rating, said: “The incentives offered by the government - including a £1,000 cash back to 300,000 small business retailers and a cap on rates increases of 2% in 2014/15 – are an admission that the current system is not fit for purpose. 

“The government recognises that it needs to encourage more commercial property development and is beginning to take steps to achieve this. However, the current plans are too little, too late.”

Empty rates are holding back much-needed development

Business rates have traditionally been a tax collected locally on the use and occupation of business premises, although since 2008 rates have been applied in full to empty premises.

Wackett added: “Charging rates on empty properties has discouraged new development. As a result there is an under-supply of grade A accommodation in cities across the UK, including major centres such as Manchester and Birmingham. This has the potential to act as a drag on growth if the economy continue to rebound at its present rate.

“Tinkering with the system is not enough. If the government is serious about stimulating commercial property development it needs to abolish empty rates, introduce self-assessment of rateable value in line with other UK taxes and bring in a standard ‘small business’ charge for properties with a rental value below £20,000.”

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