In this series of articles, CBRE Scotland answers questions on business rates – this week looks at budgeting for next year’s revaluation exercise.
Question: I know there is a rating revaluation in April next year. Presumably I will be told my new rateable value soon so I can budget for next year’s rates?
Brian Rogan: For many businesses, rates are often the third-highest overhead after staff costs and rent, therefore accurate budgeting for future annual rate liabilities is essential. However, your new rateable value is still being prepared by the assessor and unfortunately it is unlikely that you will be able to find out it out until early 2017.
This is partly because of administrative and timetable limitations, but also because all revaluation rateable values must be based on the physical circumstances of properties as at 1 January 2017, so it would be anomalous to publish the figures before then. The date for fixing “physical circumstances” should not be confused with the valuation tone date, which is the date at which rental levels are benchmarked and for 2017 revaluation purposes is 1 April 2015.
Advance publication of the new rateable values is of assistance for assessment appraisal purposes, but on its own does not solve budgeting issues. Equally relevant are the levels of the other liability variables; namely the annual uniform business rate and rate supplements; whether transitional relief is to be re-introduced to limit annual adjustments for those ratepayers facing the largest increases and decreases in liability as a result of revaluation; and whether the levels of and qualification thresholds for other rate reliefs are altered.
From our experience, setting the levels of the liability variables is unlikely until the Scottish budget is settled in January/February 2017, which is clearly unsatisfactory for budgeting purposes – particularly if, as a result of the revaluation and changes in those variables, next year’s liability is materially different and greater than the current liability.
Reputable rating consultants should be able to provide you with an estimate of rateable value now and budget figures and guidance once the liability variables are announced. When the new rateable values are published, they can produce an assessment appraisal and appeal your new rateable value before the statutory appeal deadline of 30 September 2017.
• Brian Rogan is head of rating at CBRE Scotland