HM Treasury  

MPs to probe business rates changes

MPs to probe business rates changes

The Treasury Select Committee has said it will take evidence on the changes to business rates after concerns have been expressed about their effects.

From 1 April business rates, which are based on how much annual rent could be charged on a property, will be revalued for the first time since 2010.

The last revaluation took place shortly before the property crash of 2008, meaning a large number of businesses will see rates either fall or stay the same but some – particularly in London and the south east – will see their rates jump, which has prompted criticism of the government.

Article continues after advert

Andrew Tyrie, the chairman of the Treasury Select Committee, said MPs would examine the effect of business rates on the economy and how they can be reformed.

He said: “The delay to business rates revaluations was bound to store up trouble. For businesses whose properties have increased disproportionately in value over the last seven years, the increases may be painful.

“The longer the interval between revaluations, the larger the one-off adjustments and consequential pain for the losers. A way needs to be found to implement revaluations more frequently.”

He said he had two immediate concerns: that the revaluation had benefited large, out-of-town premises at the expense of small high-street firms, and that the rise in the cap on annual increases for larger premises was large and unexpected.

Speaking in Parliament today, Prime Minister Theresa May recognised there was a “particular concern” that small businesses would be adversely affected.

She said the government is looking at “appropriate relief” for the “hardest cases”.

But property consultants Daniel Watney LLP disputed the government’s claims that three out of four businesses would see their rates fall or stay the same.

It said that under the transitional arrangements many firms would not see their rates fall for three years – by which time the reduction could have been wiped out by the fall in sterling or the rise in inflation.

Debbie Warwick, head of ratings at Daniel Watney, said: “When those seeing rates cuts and those seeing rates increases both lose out from a transitional regime, it is clearly in need of reform.”

This would particularly affect premises with a rateable value of more than £100,000, Ms Warwick said.

damian.fantato@ft.com