December 17, 2010
The Government’s decision to cut empty property rates relief from April next year will be a “further blow” to small firms already struggling in deprived areas, the British Property Federation (BPF) has warned.
Currently, businesses with empty property that has a rateable value of less than £18,000 do not have to pay the empty property business rates – a tax on buildings which are empty for more than three months.
However, local government minister, Bob Neill, has announced that the Government will cut the exemption threshold to just £2,600, claiming that it will save the Exchequer £400 million in 2011/12.
BPF chief executive, Liz Pearce, said that the plans would damage the private sector recovery. “The majority of the properties affected by today’s announcement will be in areas that are already economically disadvantaged, and so this will be a further blow,” she said.
Business rates advisers CVS senior ratings consultant, Chris Barker, said the relief has provided small business with protection at a time of “genuine hardship”. “Removing it will have very serious consequences for thousands of small businesses across England and Wales at the worst possible time,” he said.
Barker added that the announcement sent out “mixed signals” about the Government’s confidence in economic recovery.
“It’s interesting to note, according to the Government’s own figures, that the move will save the Treasury £400 million a year in lost revenue – a sharp uplift from the £185 million it cost to operate the relief in 2009-2010,” he said.
However, Forum of Private Business (FPB) spokesman, Chris Gorman, said that some small firms will benefit from the plans as landlords will be forced to fill vacant properties sooner and therefore at lower rents.
“Rents which seem to only ever increase, even during a recession, are a long-standing bugbear among business owners,” he said. “Also, many small shops are adversely affected when empty units appear in their vicinity, so from this perspective the move may be a good one.”
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