Business Rates reduction – a long time coming!

by Darron Barker, Dunlop Heywood Newcastle

The latest 2017 rating revaluation, based on rental values as of 1 April 2015, should result in a general fall in rateable values (RV) across the North East.

The pain of artificially-high business rates seems to have gone on for so long now; it’s almost hard to believe there is end in sight as the new RVs kick-in.

Whilst the headline reductions that have been publicised do look impressive: Stockton-on-Tees down 42% per cent, South Shields down 41% and

Newcastle down 25% are just a few regional examples; the benefits, in terms of reduced business rate payments, are likely to be restricted by phased implementation. These could also dilute year-on-year by RPI-based increases in the rate in the pound that are then applied to the RV. That’s a big caveat to bear in mind before businesses go out there and start spending any business rate bonuses.

There are also other massive pressures on the North East economy that perhaps haven’t been widely reported. There has been a lot of speculation, almost gloating in some quarters, on the damage that falling oil prices would have caused to the Scottish economy, if they had taken the decision to opt out of the UK.

Fortunately for the Scots, they didn’t, but just south of the border we are seeing a knock-on effect from the falling oil price, negatively affecting those businesses involved in the oil industry.

Off-shore industries within the NE are very important to the economy. I was talking to a friend recently who works for an asset finance company. They have a NE-based manufacturing client that has just had a major contract pulled by their Aberdeen-based customer because of the significant falls in the price of oil.

As with most people, I like reduced petrol prices, as it leaves me with more disposable income at the end of the week, but where consumers gain there is a price to pay to the region economically.

This was posted in Bdaily's Members' News section by Dunlop Heywood .