One of the bills (planned new laws) announced in the Queen’s Speech today was a plan to give a 50% discount on business rates for all independent shops, pubs restaurants and cafes in England with a ‘rateable value‘ below £51,000. Business rates are essentially Council Tax for local companies; and there have been calls for this to happen for years – as there’s an obvious unfairness in the amount of tax paid by high street shops, compared to online businesses.
Not everyone will benefit – and to understand why, we need to understand “Rateable value“. This is an estimate of the annual rental value of a commercial property on the open market, and the higher the rateable value, the higher the business rates you have to pay. The concept is similar to the way houses and flats are put in to bands for council tax (from A, the cheapest, to H, the most expensive), except that the huge range of commercial premises – from tiny kiosks all the way to million-square-foot offices and distribution centres – means that each premises has its own specific valuation rather than being grouped in to eight rough bands. Some premises may not change hands for years meaning it’s not always clear what the rent would actually be – so these rates are determined once every five years by an independent valuation officer from a government agency, the Valuation Office Agency.
The £51,000 threshold covers roughly 90% of the total properties in England and Wales – and we reckon it will cover many, but not all of the businesses on Lavender Hill. We have obtained a few rateable values for businesses scattered along Lavender Hill: by and large, the eastern end and the smaller units will benefit, but the premises at th emore expensive end of the street nearer the station, and the larger shops, will not:
- Newspot food & Wine, a typical smaller premises at 8 Lavender Hill, has a rateable value of £17,000 – so will definitely benefit
- Khan’s curry house, about half way along the road at 159 Lavender Hill, has a similar value of £19,750
- The Crown pub, at 102 Lavender Hill, has a rather higher rateable value of £39,000, but will still benefit (and may also see an additional £1000 discount being propsoed for independent pubs)
- Sugar Cane bar at 247 Lavender Hill – a double width unit in a more excpensive part of Lavender Hill – is valued at £55,000, so will not benefit
- Jack’s cafe at 252 Lavender Hill is £39,000 so will squeeze through – interestingly its rateable value is the same as the Crown, suggesting the smaller premises size is balanced by being closer to the station
- The Party store at 268 Lavender Hill, a well placed triple unit, is £140,000 – way above the threshold
- And Asda, with its vast premises at 204 Lavender Hill, comes in well over £2½ million so is unsurprisingly miles out of scope
This proposal is not an entirely new thing. For the last two years, those with a rateable value under £51,000 have been offered a one-third discount on their rates by Wandsworth, thanks to funding from central government. What the new law proposes is to make this ‘temporary’ discount both bigger and potentially permanent. This won’t be a miracle answer but there’s no doubt that it should help our local businesses stay in business.
Lower business rates will of course cause headaches elsewhere. Like Council tax, these rates do pay for local services (albeit those who pay them have long complained that, unlike householders paying Council tax, they don’t even get a rubbish collection thrown in) and this tax cut will create a bit of a hole in Wandsworth’s own accounts (and those of all other local authorities). Whether that hole is filled by more central government funding, or whether Wandsworth has to find another way to raise money, remains to be seen!