Pubs saved from an average 11% rise in business rates, show VOA stats

By Gurjit Degun

- Last updated on GMT

Related tags Business rates Business rates in england and wales Economics Tax

Brandon Lewis: the community pubs minister
Brandon Lewis: the community pubs minister
Pubs have been saved from an average 11% rise in business rates payments, following the Government’s announcement to push back revaluations by two years.

The Government caused outrage by postponing revaluations for two years until 2017, with concerns that many pubs would be left paying unfairly high rates for longer than they should. This also prompted a debate in Parliament last week.

At the time, the Department for Communities and Local Government said that this would benefit the retail sector. However, after the Publican’s Morning Advertiser requested pub-specific information, the Valuation Office Agency (VOA) revealed that although pubs would have seen an average 5% fall in rateable value (RV), bills would have actually increased by 11%.

It added that pubs in central London would have been likely to have seen higher payments, with RV rising by 10% on average.

In comparison to the rest of the retail sector, petrol stations would have seen a 28% rise in tax paid, theatres would have seen a 25% increase, and hotels a 6% rise.

The VOA report said: “Outside central London it is anticipated that the pub sector as a whole would experience higher bills (judged -6% RV change), but this outcome is likely to be heavily influenced by the performance of properties in the city centres as against those in peripheral locations. Overall, the pub sector is judged -5% RV change; implied +11% tax change.”

Community pubs minister Brandon Lewis said: “The last revaluation was based on April 2008 valuations and rents set at the height of an unsustainable property boom. Since then, the economy and property market have faced exceptional changes. Rents have fallen since that property boom. Some groups have assumed that falling business rents would entail falling business rates. However, this is not the case. While aggregate rateable values have fallen, this would automatically be offset at the revaluation by a higher rating multiplier. Firms would just be required to pay a higher proportion of their rateable value.

“The Agency’s estimates are based on an increase in the multiplier of 16%. My Department has actually forecast an increase of 20%, as a consequence of inflation and the adjustment required to the multiplier for appeals; in this context, in practice, the losers would be likely to be even greater than those presented in the Agency’s paper.”

He added: “I appreciate that as a very direct form of taxation, business rates are not popular. Local government finance is too often opaque and confusing. However, we are acting in an open and transparent manner. This independent evidence shows that by postponing the 2015 revaluation, we will protect local firms and local shops from sharp changes in business rates bills at a time when we want to ensure the economy is growing. It will provide business with a stable economic environment in which to invest and support jobs for the next five years.”

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