Business Rates: Reducing the Financial Burden

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Business Rates: Reducing the Financial Burden

The Council has to design a discretionary rate relief scheme for businesses badly hit by changes to business rates. This is a consultation on the way the scheme will work. We want to hear from local businesses.

Businesses are welcome to contact the Council with any information on how the proposals might affect them and any suggestions for improvement.  The deadline is 4.30 pm, 1 September 2017.

Cabinet discussed this issue at the Cabinet meeting on 31 July 2017  Cabinet discusses this issue again on 4th September and the full Council will consider the scheme on 25 September 2017.

Background and proposals for the scheme are set out below and in this report to Overview and Scrutiny Committee - pdf icon Business Rates - Reducing the financial burden on businesses [86kb]

The Council invites local business organisations, such as the Chambers of Commerce, to reply on behalf of the business community.

Responses can be emailed to consultations@rother.gov.uk or revenuesandbenefits@rother.gov.uk

Written submissions can be dropped into the Town Hall, Bexhill, our offices at Market Square, Battle and our desk at Rye Library.

Write to:

Robin Vennard, Service Manager - Finance & Welfare, Rother District Council, Town Hall, Bexhill on Sea, TN39 3JX

Supporting Small Businesses

The Chancellor announced a relief scheme would be available to business rate payers facing large increases in their bill because they have lost the small business or the rural rate relief.  Initial terms for this scheme were published on 9 March 2017. 

The transitional relief scheme does not provide support for changes in relief.  Therefore, some ratepayers are losing some or all of their small business or rural rate relief.  They may be facing very large percentage increases in bills from 1 April 2017. 

This new relief will limit those covered by the scheme to an increase to £600 each year for the next five years.  We believe that 32 businesses will be positively affected by this change.

Support for Public Houses

The Government announced a new relief scheme for public houses that have a rateable value of below £100,000. 

Under the scheme, eligible public houses will receive a £1,000 discount on their bill.  The relief will have effect for 2017/18 only. 

Guidance on the qualifying criteria was only received in June 2017.  It excludes licensed restaurants, cafes, member clubs and national pub chains. 

We will be writing to qualifying businesses inviting them to apply for the public houses relief scheme, which will be backdated to 1 April 2017.

Discretionary Relief Scheme

The Government established a £300m discretionary fund over four years from 2017/18 to support businesses.  The national £300m covers the four years from 2017/18  in the following amounts:

  • £175m in 2017/18
  • £85m in 2018/19
  • £35m in 2019/20
  • £5m in 2020/21

The maximum funding available in Rother over the four years is:

  • £228,000 in 2017/18
  • £111,000 in 2018/19
  • £46,000 in 2019/20
  • £7,000 in 2020/21

Funding will be drawn down from the Government once a year, based on the actual amount of relief granted by the Council each year. 

Most support will be given in the first year with a rapid drop off in years two to four. 

Whilst general guidance has been issued by the Department for Communities and Local Government (DCLG) each Council is largely free to design their own scheme.  The scheme can reflect the local issues in Rother and support the Council's economic and regeneration strategies. 

Whatever scheme is introduced, there will still be a cap on all the relief given up to the funding available from the Government.

Analysis of Increase in Business Rates on Rother Businesses

The Council has tried to work out which local businesses will be most affected by increases in their rateable value.  Of course, a number of businesses have seen their business rates bill go down.  This work looked at the percentage increases, the amount of increase in rateable value and the type of businesses affected.  The percentage increases vary enormously. The highest increase was 477%.  The amount of increase also varies significantly up to £195,000 for one retail warehouse and premises.

The type of businesses adversely affected by the revaluation in Rother has been analysed, based on the Valuation Office Agency classifications.  The top six most affected businesses by type are shown below:

Top Six Most Badly Affected Business Types
Business Type

Number of businesses

adversely affected by the revaluation

Shops73
Holiday Units58
Public Houses48
Office Accommodation48
Warehousing46
Communications (including masts) 45

 

Our Proposed Design for the Discretionary Relief Scheme

The Council has a high degree of freedom in its scheme design.  We suggest whatever scheme is adopted should be simple to administer.  The funding cannot be used to meet our administration costs.  To stay within the amount from the Government and to keep the scheme simple we propose:

1.   Relief will be allowed to qualifying businesses as at 1 April 2017.  Any business starting to occupy a business property after 1 April 2017 would not qualify for help.  Our reason is that the new rate liability will be known to the business before they occupy the property and would be taken into account in their business planning.  This is not the case for businesses in their existing business premises.

2.  Businesses will have to apply for the help.  Applications will help the Council to check that any other reliefs have been claimed and that any state aid issues are identified.  It will be up to businesses to find out what help is available and to make an application.  But, when they do apply, we will try to make sure they have all that they are entitled to get.

3.  Help will be available to businesses with a rateable value of less than £100,000.  Our reason is to make sure the available funding is targeted at small to medium enterprises (SMEs) within the district.  We believe they would need the most support through the transition.

4.  Relief would be applied after all other qualifying reliefs are awarded e.g. mandatory rate relief, small business rate relief.  Our reason is to make all the relief money go as far as it can.

5.  That the following business sectors are excluded from help:

  • Local Authorities (including Rother District Council, East Sussex County Council and any parish or town councils in Rother are automatically excluded from receiving relief)
  • Other precepting authorities (Sussex Police and Crime Commissioner and East Sussex Fire and Rescue Service are automatically excluded from receiving relief)
  • Other public sector organisations (e.g. National Health Service Trusts, Ministry of Defence, etc.)
  • Public sector organisations (e.g. Health, Local Government)
  • Utility and communication companies
  • Financial services (e.g. banks, accountancy)
  • Gambling establishments
  • Pawn brokers and similar organisations
  • Estate agents
  • Solicitors
  • Private schools - post five year old education

6.  That the amount of relief awarded in the first year will ensure qualifying businesses will pay no more in 2017/18 than the rates paid in 2016/17.  Our reason is that this seems reasonable and what businesses will have planned to pay as a minimum.

7.  That the relief awarded for year 2 to year 4 will be reduced by the following amounts in order to stay within the available funding:

  • Year 2 - 48% of the relief awarded in 2017/18
  • Year 3 - 20% of the relief awarded in 2018/19
  • Year 4 - 3% of the relief awarded in 2019/20

Please send your response to Rother District Council by 4.:30pm on Friday,  1 September 2017.  Late submissions may not be taken into account. 

Write to Robin Vennard, Service Manager - Finance & Welfare, Rother District Council, Town Hall, Bexhill-on-Sea, TN39 3JX.  Email consultations@rother.gov.uk or drop your submission into our offices in Bexhill, Battle and Rye.

 

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