Ludlow still faces rates hikes despite lower bills after MP’s intervention and appeals

After effective negotiations and some successful appeals, the overall business rates bill for Ludlow has gone down. The town had been facing above average increases after the revaluation of properties last year. It is still facing above average increases but more than seventy businesses have had their rates bills reduced since the increases were announced.[1] One in nine Ludlow businesses will see a reduction in rateable value and the changes have moved three local businesses out of the business rate regime altogether. The reduction in rateable values for those businesses that pay rates under the current rules amounts to £120,000. That’s a 10.4% reduction and good news for local companies and traders.

The campaign to tackle potentially crippling rises in business rates has been a twin track process. The Chamber of Commerce and Phillip Dunne MP have worked hard together to challenge the Valuation Office Agency on its revaluation of retail premises the town centre. Individual businesses have also been appealing against the revaluation of their premises. From what I hear, a lot of businesses have had their appeals turned down but some at least have succeeded.

Rateable values are a moveable feast.[2] Data on gathered today will be out of date tomorrow because of new appeals, businesses closing, and others opening or expanding. This article is based on the best available data today.[3]

Seventy-two businesses across Ludlow and Ludford have secured a cut in their rateable values and, as a result, forty of these have secured a cut in their future business rates. The other 32 are exempt from rates under current rules.[4]

Twenty-three local businesses have secured a reduction in rateable values. Twenty of these pay business rates under current rules and they get a reduction of £53,000 in rateable values in total.[5]

Businesses shouldn’t be complacent because they are currently exempt from business rates. Some smaller businesses may have decided not to challenge their increase in rateable value because they are still below the current threshold of up to £12,000 for paying business rates.[6] That makes sense in terms of their time and it avoids the cost of employing an adviser. But in the long term it might be unwise. A future cash strapped government may decide to lower the threshold. On the most recent rateable values, a reduction in the threshold at which rates are payable to £10,000 would bring an additional 50 Ludlow companies into the business rate regime.

For some retailers, the cuts in rateable value are small comfort. Poyners in Broad Street was facing its rateable value soaring from £17,250 to £31,250. Now the rise will “only” be to £30,000. This must be a bitter blow after the campaign a few years back to get the crippling business rates for this traditional Ludlow business reduced. Other businesses will find the sliding scale of reliefs above £12,000 means they get less relief as their rateable values are cut, so the reduction in rateable value might not make much difference in the next few years.

Ludlow Community Hospital still faces an increase in rateable value from £92,000 to £110,000, despite the closure of the old workhouse used for the maternity unit. Why are public health organisations are forced to pay business rates to government? Perhaps Phillip Dunne could explain? To me it is anomalous because charities do not pay business rates. Both charities and the NHS are working for the public good. They should be treated equally.

Rateable values for nine Ludlow businesses have increased since the new rateable values were published last November. One example is Portcullis Surgery has expanded and has seen a £6,250 hike in its rateable value. Other businesses have changed or use space differently. The overall increase in rateable values is £33,250 for these businesses.

The reduction in rateable values is very welcome but it still leaves our town facing an overall increase in rateable values of 24%. Nationally, the increase is around 10%.[7]

Business rates are due to rise by 3.9% next April in line with inflation.

The rates system is broken. Rateable values in small towns like ours are being distorted upwards by landlords racking up the rents. This is a double whammy. Rents go up displacing local businesses in favour of national and international companies that can afford the rent. And business rates go up because landlords can charge higher rents for non-local companies.

This double blow means that many of the distinctive businesses of our town will struggle to survive rather than thrive. That could mean we will eventually become a clone town or just decline altogether.

Local businesses should be taxed but we need a better way of doing it.

Notes

[1]. This article is based on my database of 672 Ludlow and Ludford business premises. Since my last analysis a few premises have become vacant, a few others have come into use. I haven’t been able to take account of all these changes for this article.

[2]. This article is based on rateable values. Business rates are levied at just under half the rateable value at present but not for smaller businesses and charities.

[3]. I am mystified as to why the rateable value for the Smithfield car park risen from £15,500 after the initial data for the April 2017 revaluation was published to £26,500 now. Castle Street car park has shot up from £25,000 to £59,000. Upper Galdeford car park has rocketed from £31,000 to £115,000. It is looks like the data I obtained from the Valuation Office Agency at the end of last year was not fully up to date for the car parks. I have excluded the car parks from the statistics in this article to prevent a distortion of numbers and while I seek some advice.

[4]. There are no business rates payable for rateable values £12,000 or under. A series of temporary and transitional reliefs along with incremental arrangements apply above £12,000 for businesses, especially those facing large increases.

[5]. On my definition, there are 230 locally owned businesses in Ludlow. These include engineering companies, DIY stores, clothiers, grocers and butchers, pubs and cafes and hairdressers. Of these, 162 will pay business rates under the revised rateable values for 2017. Twenty have received relief through appeals and the mini-revaluation organised by the Chamber of Commerce and MP Phillip Dunne.

[6]. There is no public data on how many companies have challenged their increase in rateable value.

[7]. The national figure I provide does not take account of any appeals or other changes since the revaluation data was published last year. More businesses in Ludlow are exempt from business rates than before. But those that remain trapped in this out of date taxation system face an overall increase in rateable value of 41%. This will be reduced in the short term by relief measures but the rates hike will work its way through to full cost over the next three years.

2 thoughts on “Ludlow still faces rates hikes despite lower bills after MP’s intervention and appeals

  1. it does raise the issue of how fair are business rates at all? The 120,000 quoted here for one business is a lot of money to find if you are a local concern. Balance this against the fact that large companies are not paying fair tax on their turnover and VAT is also another strange tax as certain business end up reclaiming what they spend on VAT e.g. farmers.
    Seems the whole tax system is too complicated but the business rate in particular is a disincentive to grow a company. A 150 sq m property might pay £1,500 a year in council tax but if that is a shop or office it will pay £10,000 or more.
    One thought would be if you are not VAT registered then you don’t pay business rates. That would have implications for tax income but would foster a stable small business sole trader economy. The lost revenue might be displaced by adding a small amount to council tax bills – if it was £50 that would be a £1 a week to see small business flourish. Sounds like a sensible investment.

    This still leaves the BIG problem for small companies employing staff – which would then need big jump in income to pay rates but also pensions and NI. There needs to be a band upto about a million pound turnover that has this burdened lessened and this is paid by the larger companies.

    Another step to stop the tax fiddling would be that all companies over a million pound turnover are UK registered for tax purposes and pay UK tax. This could be leveraged for the internet giants by taxing at transaction and then leaving the companies to claw back the money at end off year. Could be a further 10% on internet transactions.

    Its worth mentioning that any such deals will not be available post BREXIT we won’t have any choice but to put up with the crumbs from the US table.

  2. Can’t quite understand why you say this won’t be viable post Brexit. Surely we will be more able to decide what we ourselves without ref to Euro ?.
    How does USA figure in your local tax summaries ?

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