Rates are always a hot topic for the high street business but the new valuations by Land and Property Services (LPS) coming into force from 1 April 2020 could have an impact on any business.
LPS have recently completed their revaluation of non-domestic properties for business rates. This process sets the Net Annual Value (NAV) on which the regional and district rates will be applied and could have a significant impact on your rates bill come April 2020.
Reval 2020 brings the rateable values back into line with rental values of non-domestic properties at April 2018. The LPS aim is not to increase business rates (with the revaluations designed to be revenue neutral), but more to do with redistributing the rate burden. As with any redistribution, there are winners and losers. With the most recent revaluations carried out in 2015, Reval 2020 could result in significant changes to the rental value of your property.
LPS have been valuing some 74,000 properties including shops, offices factories, warehouses, pubs, cinemas, hotels, schools, hospitals, and all other non-domestic properties. This process started with writing to over 40,000 ratepayers asking for rent, lease and trading information. This was analysed and used to set the new rateable value.
Reval 2020 has seen NAV increase by 6.8% from £1,560,000 in 2015 to £1,667,000 in 2020. With office buildings seeing an increase of 8%, manufacturing an increase of 2% and, not unexpectedly, retail premises seeing a decrease of 2%.
51.5% of properties have seen the NAV remain the same or decrease, with 40.8% of properties having their NAV increase over and above the NAV average increase of 6.8%.
Stephen Houston, Director at GMcG Chartered Accountants, believes business owners should ensure they are fully aware of how they may be impacted:
“Any increase in rates could have an impact on a business’s cashflow and have potentially serious consequences for the business, particularly if it is operating on narrow margins or is in an already challenging trading environment. If a new, higher level rate cannot be successfully contested, careful planning should be undertaken to mitigate any risk to the business operations and profitability”.
To find out how the value of your property has been affected log onto www.finance-ni.gov.uk/reval-2020-ni and search for the property. This will allow you to see your current value and the new proposed value. It also gives information on any reliefs that will be applied e.g. Industrial, Charitable or Sports and Recreation Reliefs.
If you don’t agree with the information or if you don’t agree with the valuation, what should you do?
If you didn’t return the request for information you should complete this and send to LPS as soon as possible. You may also consider getting a valuer of your choice to look at your rates to determine if any extenuating factors can be used to help get a lower value. You should then contact LPS to discuss the valuation and any of your concerns.
LPS have stated that they want to get the values right and will take any new evidence on board in determining the NAV. As the values are still in draft, now is the time to check your value. It will be a much easier process to get valuations reviewed at this stage than when they are considered final on 31 March 2020. After this date any concerns you have regarding the property value would be through LPS’s normal appeals process.
Sue Gray, Permanent Secretary at Department of Finance has said “The growth in the total value of the Valuation List does not translate into a corresponding overall increase in rate bills. I will be seeking to ensure that the regional business rate poundage that we set is lowered to reflect the overall growth in the Valuation List. I will also be encouraging councils to do the same in respect of district rate poundages reflecting the fact that revaluation is not about raising more revenue overall from rates.”
As Reval 2020 is not part of the Business Rates Public Consultation Review, which is a fundamental examination of the business rates and relief system in Northern Ireland, it will be interesting to see what impact the recommendations from the consultation which closed on the 11 November 2019, will have. No doubt this will be high up the list of priorities for new Finance Minister Conor Murphy MLA to address and with non-domestic rates yielding over £600million per annum to fund central government services and district councils, it will be interesting to see who are the winners and losers in the rates merry-go-round as Stormont looks to balance its books.