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The Government continues to recognise the impact that business rates has on business and Chancellor George Osborne has used his eight budget to announce his intention to double relief for small businesses, says commercial property agent Prop-Search.
It was announced in the Autumn Statement that Government was extending Small Business Rates Relief until April 2017. This meant that around 405,000 of the smallest businesses - with Rateable Values below £6,000 - would continue to receive 100% relief from business rates, with around a further 200,000 benefiting from tapering relief.
Samantha Jones, an Associate Surveyor at Prop-Search, says: “However, in his Budget of 16 March 2016, the Chancellor has gone one step further and out-of-the-blue has announced that from April 2017, small businesses that occupy property with a Rateable Value of £12,000 or less will pay no business rates. There will be a tapered rate of relief on properties with Rateable Values up to £15,000.”
“This is predicted to release approximately 600,000 businesses from paying business rates.”
The Chancellor has also announced that the way in which stamp duty on freehold commercial property and leasehold premium transactions is calculated will also change. Currently, these rates apply to the whole transaction value but from 17 March 2016, will apply to the value of the property over each tax band.
The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000; 2% between £150,001 and £250,000, and 5% above £250,000. Stamp duty rates for leasehold rent transactions will also change - with a new 2% stamp duty rate on leases with a net present value over £5 million.
The new rates will come into force from 17 March 2016, but transitional arrangements will be in place for deals that have just begun. The Treasury estimates that these reforms will raise £500 million per year from 9% of those affected by the higher rates, while over more than 90% will see tax bills cut or stay the same.
Samantha Jones adds: “This reduction will mean it is more affordable for those wanting to invest in commercial property. A property valued at £260,000 would pay £7,800 today but this will drop to £2,500 from midnight.”
So whilst small commercial property investors are pleased with this reform, those who advise and represent larger investors are less so. The British Property Federation has shown its concern stating that commercial property investment can often act as a catalyst for regional growth and fears it could set back development in certain areas.
Further information or advice can be obtained from Prop-Search - Tel: 01933 223300 / 01604 492000 or its website: www.prop-search.com