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Business rates impact on property investment highlighted

08 May 2019

Criticism of the business rates system has been lodged by CBI head John Allan, who said it was impacting all areas of the UK.

With rate revaluations made very three years, he said this lagged behind economic developments and fluctuations in property prices.

Mr Allan provided the example of Redcar, Teesside, where the closure of the local steelworks in 2015 saw large numbers of people lose their jobs and a significant drop in property prices.

This led to businesses in the area continuing to pay business rates at levels up to 20% above the rateable value of their facilities.

Difficulties were also experienced in areas experiencing rapid growth, he said, as business rates would then aim to catch up with property prices and could see companies faced with increases of nearly 50%.

Investment in facilities is also being impacted by the system, said Mr Allan, as business rates could increase following minor improvements.

"Whether it's a large capital investment, or several smaller upgrades to existing property, any real efforts to invest will see your business rates rise," he said.

High business rates have been cited as another factor in the closure of High Street retail premises, although Chancellor Philip Hammond promised cuts worth £1.5bn for UK businesses in his last budget.

The BBC report quoted financial secretary to the Treasury Mel Stride as stating the importance of business rates to assist in funding public services and local amenities:

"Following our review of business rates in 2016, we're introducing reforms that will make the business rates system fairer and lower business rates bills by £13bn over the next five years."

However, response to the speed with which rate revaluations are conducted continues to be awaited.

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