Business Empty company rates relief 'expenses ₤ 1bn'

Empty company rates relief ‘expenses ₤ 1bn’

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Julie Fletcher, founder of Middlesbrough shop Pie Jackers

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Julie Fletcher, who established Middlesbrough store Pie Jackers, is worried about the high level of her rates expense.

Some councils lose out on millions of pounds of possible company rates earnings through a tax relief on empty properties, BBC analysis shows.

The Treasury said it would announce a review of organisation rates “in due course”.

Specialists state the present system pits regional authorities – which want steady income – versus companies.

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AFP

Organisation rates are comparable to council tax for organisation homes.

Councils currently keep around 50%of organisation rates in their location but are anticipated to keep 75%from 2021.

Rates do not have to be paid on empty organisations for 3 months, such as when stores close down or move.

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AFP

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Andy Preston stated service rates were unreasonable.

Andy Preston, independent Mayor of Middlesbrough, said: “There’s a window where we lose cash and that adds up to a lot, so we’re doing everything we can to help make sure we can sustain organisations.

” We’re trying to bring individuals into town to live here, for leisure, to work, however it’s a huge battle, and what’s even worse, an unfair fight.

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AFP

Analysis

David Rhodes, Political Reporter

Councils throughout the nation are captured in between a rock and a difficult place.

Whilst some councils would like to see business rates reformed or even eliminated, many also fear a significant overhaul of the company rates system that could see them lose a crucial source of income to money regional services.

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AFP

‘ We require more assistance’

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Julie Fletcher fears she may need to close Pie Jackers.

Pie Jackers owner in Middlesbrough Julie Fletcher stated she had put her “heart and soul” into the business but may have to close due to an “huge” rates expense.

” It will have an enormous effect, it will stop us utilizing another individual and we simply feel like there ought to be more support,” she said.

Which locations lost the most earnings to empty units?

Portion (%) of potential business rates income lost 2014-2018

In other places, the collapse of bigger organisations can considerably reduce regional authorities’ earnings through empty premises relief.

The collapse of the SSI steelworks in Redcar and Cleveland in 2015 led to a loss in business rates of around ₤10 m.

Around ₤ 3m was provided to the council as part of a federal government “safety net” bailout but the regional authority was still faced with countless pounds of lost income and no rates on the website moving forward.

The local council has actually estimated the closure will see it underfunded by ₤125 m to 2025.

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STDC

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The former steelworks in Redcar closed in 2015, costing ₤10 m in lost business rates.

In Scotland, up to one in 10 company properties get empty properties relief, which amounts to ₤82 m throughout the country.

Our analysis found:

  • Relief for property managers on empty company facilities reached ₤996 m in 2015, the highest the figure has been considering that the economic crisis, not accounting for inflation.
  • Empty home relief sees some councils lose out on as much as 6%of their organisation rates income, though only around half that quantity would be retained in your area.
  • North east and north west Scotland lose the greatest percentage of business rates earnings to empty units.

Lost business rates earnings from empty homes 2014-2018

Professor Paul Greenhalgh, who researches real estate and regeneration at Northumbria University, stated short-term relief might also show some organisations were expanding into different properties.

Councillor Richard Watts, who chairs the Local Government Association’s Resources Board, said company rates were “a very crucial source of earnings” for local government at a time when they deal with a total financing gap of ₤ 8bn by 2025.

” The Government need to commit to moving forward with essential reforms, which consist of attending to organisation rates avoidance and the impact of reliefs, such as empty properties relief,” he said.

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AFP

More about this story

The Shared Data System makes data journalism available to news organisations throughout the media market, as part of a collaboration between the BBC and the News Media Association.

To find out more on methodology, click here For the full dataset, click on this link Read more about the Shared Data Unit here

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