The Chancellors’ Budget 2016 proved to be reasonably positive for small business. We have chosen to focus on the changes in relation to business rates – which have, since its inception in 1990, proved to be a real barrier to entry/expansion.
Business rates are calculated by multiplying the ‘rateable value’ of a property by the uniform business rate (UBR). The ‘rateable value’ is the Valuation Office’s estimate of a property’s market rent at a set valuation date. The methodology behind the valuation is often a subject of heated debate.
Small businesses rate relief has been extended, with small business’ paying 0% if rateable value is below £12,000 – tapering to £15,000 from 1 April 2017 – and then discounts if value is between £12,000 and £15,000. Additionally the threshold for businesses paying the highest rate of the tax has been increased from £18,000 to £51,000. All welcome changes that encourage the taking physical space on the High-street.
These changes to business rate thresholds will mean local authorities and landlords can be more competitive and flexible to attract investment. Start-ups will be more likely to want to move and upgrade their premises as their business expands.
In addition, commercial property investors should welcome this change as there is less likelihood their tenants will struggle to pay these bills and reducing void periods.