The chancellor delivered his first Spring Statement today which was longer than the predicted 15 minutes and contained the now usual jokes aimed at the opposition. There were a few topics raised of interest.
The first was business rates, the annual tax on non-domestic property, which currently raises just under £24bn in England annually allowing an important source of funding for local services.
Business rates are determined by a properties rateable value, which is its estimated open market rental value on a set date. This is assessed by the Valuation Office Agency in England, independently of Government.
In the Autumn 2017 Budget, the Chancellor announced that the revaluation of business rates would take place every three rather than five years following the next revaluation.
The revaluation process allows the rateable value to more accurately reflect the market conditions. Today (13 March) the Chancellor announced that he would bring forward the next revaluation from 2022 to 2021 meaning that the next revaluation thereafter will be in 2024.
This may come as welcome news for some but given the overall increase in property prices over the long terms, some businesses will be paying higher business rates a year earlier than they were expecting.
The Chancellor also mentioned the shortage of affordable homes and confirmed in the Spring Statement that the Government is ‘getting the job done’.
An investment programme was announced in Budget 2017 of at least £44 billion over the next five years supplying 300,000 UK homes a year on average.
He also confirmed the Government was working with 44 areas on their bids into the £4.1bn Housing Infrastructure Fund, Housing Growth Partnership will be more than doubled to £220m (support for small housebuilders).
Also, London will receive £1.67bn to start building a further 27,000 affordable homes by the end of 2021-22. The question is, can you still have an affordable home in London given the increases in house prices over the years?
He also mentioned the reduction in stamp duty land tax (SDLT) for first-time buyers. First-time buyers benefit from lower rates of SDLT on the basis the home they are purchasing is worth less than £500,000. If the home is worth less than £300,000 then you don’t pay any SDLT.
Thereafter the rate is 5 per cent on the portion from £300,001 to £500,000.
He said today that an estimated 60,000 first time buyers have benefited from the lower rate of SDLT since the measures were first announced in the 2017 Budget. Therefore, this part of his plan is clearly working if the figures are correct.
Rajiv Vadgama is a partner in the private client team at RSM UK