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News - 15 October 2004

Brighton Uniform Business Rates Increases

With increases of 98% in some cases (e.g East Street) and 50% being about average, Brighton businesses will be shocked when their UBR demands arrive next year.

In the first revaluation since 2000 significant increases in rateable values (RV) reflect significant increases in rents over the last five years. The Inland Revenue Valuation Office determines the RV of a building. It is what they estimate the appropriate rent to have been on the 1st April 2003. That figure is then applied two years later in April 2005.

An RV of say, £20,000 doesn’t mean that a business actually pays that sum. The rates payable is determined by multiplying the RV by a “multiplier” which is determined by the Treasury. At the moment the multiplier is 45.6p. Consequently an RV of £20,000 translates into £9,120 (20,000 x 45.6). The multiplier increases every year linked to the Retail Prices Index (RPI) but the Treasury is keen to remove that link (see earlier story in Knowledgebase “Councils might regain control of UBR” April 2004).

For 2005 the government is likely to reduce the multiplier to 41.5p but with the RV going up by such large percentages this will still mean a much bigger bill. To ease the burden of any large increases the government will phase them in over four years with the first year being limited to no more than 12.5%. (for businesses with an RV of over £15,000), then 17.5% in the second, 20% in the third and 25% in the fourth year.

Despite this phasing, the fact remains that businesses will pay substantially more over the five-year period. If we look at an actual example of a small shop in Bond Street in the North Laine with a current RV of £21,250 it pays £9,690. The new 2005 valuation has increased to £31,750 (49%). Given that the multiplier will fall to 41.5p this translates into a rates payable of £13,176. This is an increase of nearly £3,500 which will be limited in the first year to no more than £1,211 and in the second to £1,695 etc.

Businesses and business associations should think carefully about launching mass appeals after taking professional advice. They should also beware of the many approaches that will be made by cowboy surveyors offering to negotiate reductions. This is particularly the case if they want hundreds of pounds in advance fees. Brighton & Hove has dozens of reputable property consultants and wherever possible you should engage services locally.

For the first time this year the government has introduced a small business rate relief scheme for those with RVs of less than £15,000. Businesses with an RV of £5,000 or less can get 50% reduction on their rates payable and then there is a sliding scale up to an RV of £15,000+ that does not offer any reduction. Unfortunately it isn’t received automatically and businesses have to apply for the relief on an annual basis.

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