Reduction in business rates for Heathrow means it will pay about £10 million less per year for next 5 years


Businesses in Richmond Upon Thames subsidise Heathrow Airport Tax Cut

By  (The London Economic)

Whilst businesses in Richmond upon Thames face a staggering £70m increase in business rates over the next 5 years, Heathrow Airport, the issue at the centre of the current by-election, in comparison received a tax cut ahead of the expansion announcement, say CVS business rates specialists.

The reduction in Rateable Value at Heathrow Airport is almost the equivalent of the entire increase in property value for all 5,802 Richmond Upon Thames businesses.

It is just a matter of weeks since the Government adjusted the Rateable Values of every business property in England and Wales to reflect changes in the property market. The new Rateable Value will be used to determine the basis of the tax calculation for rates next April and for the next 5 years.

The revaluation of business properties usually happens every 5 years but was controversially delayed by 2 years as a result of the economic downturn. The last revaluation came into effect on 1st April 2010 based on the property market as long ago as 1st April 2008.

Those whose properties have performed better than their peers – by dint of the quality of their property, location or business sector – since the previous revaluation can expect to see their bills rise. Equally, those whose properties have underperformed can expect to see their bills fall.

Whilst Heathrow Airport remains the largest ratepayer in England and Wales, the Government reduced its property assessment by £32.5m- from £247.5m to £215m- meaning that next year it will pay £3.92m less in property tax.

However, because of the Government-proposed transitional rate relief scheme, any reductions in Rateable Value are capped and phased in gradually over the Rating List. This means that on average over the next 5 years, CVS surveyors suggests that Heathrow Airport will pay £118.02m per year in business rates bills, which is down from £127.96m in the previous List; a 5 year saving of £49.7m.

There has been a further £6.49m reduction in property tax assessments at two cargo centres at Heathrow Airport too.

But Gatwick Airport, Heathrow’s rival for expansion, saw its Rateable Value rise from £56.6m to £60.4m, making it the second largest ratepayer in the country.

Yet CVS business rates specialists suggest new Rateable Values recently published show that across Richmond Upon Thames, total property assessments have increased by a staggering £29.05m.

Their analysis shows 5,802 Richmond Upon Thames businesses had a combined Rateable Value of £200,780,068 based on the last property assessment in 2010, which has formed the basis of rates bills for the last 7 years, but this has just increased to £229,827,201.

CVS projects that on average over the next 5 years, taking into consideration the proposed transitional rate relief scheme and inflation, business rates bills across Richmond Upon Thames next year will be £14.1m per year higher than this year, resulting in a massive £70.5m tax hike across Richmond Upon Thames over the next 5 years.

Mark Rigby, CEO of CVS says: “The purpose of a business rates revaluation is to try and achieve fairness by ensuring that tax liabilities are based upon up-to-date values.

“Revaluations create winners and losers as tax liabilities are shifted in line with relative movements in property values since the previous revaluation.

“Across the 32 Boroughs of London and the City for all sectors, Rateable Values have risen by 24.04% on average yet Heathrow seems to have emerged as a major ‘winner’.”

Businesses facing increased rates bills are advised to seek professional advice as to whether they are paying the correct amount. The Government’s changes to the business rates appeals process means that there is now a three-stage process known as ‘Check. Challenge. Appeal.’ (CCA) for the property’s new assessment.

The CCA process is intended to manage the flow of cases through the system in a structured and transparent way, and each step must be fully completed in sequence to submit an Appeal.

Nearly three quarter of a million businesses in England and Wales challenged their last assessment with almost 1 in 3 receiving a rebate.

Mark Rigby added: “The by-election campaign will revolve around Heathrow Airport and its expansion. However, local businesses are now faced with massive tax increases next year with only 6 months to prepare for them.

“It’s a bitter sweet pill to swallow for businesses in Richmond Upon Thames knowing that their property values have increased and will effectively subsidise Heathrow’s tax savings.

“It is essential that businesses across Richmond Upon Thames consider a thorough check of their new tax assessment as there may well be scope for an appeal.”



Heathrow is top business rate payer in England and Wales

13 October 2016  (BBC)

London’s Heathrow airport will continue to pay the highest rate bill of any business in England and Wales when new rateable values are applied in 2017.

The airport’s annual bill will be £118m, according to calculations by the property surveyors CVS.

The firm’s list of the top 50 rate payers is dominated by airports, power stations and London head offices.

Harrods and Selfridges both appear in the top 10, paying £18m and £16m respectively each year.

The new rateable values for tens of thousands of businesses in England and Wales were announced in September, following the first revaluation since 2008.

What are rateable values?

The rates are a form of business tax, based broadly on the rentable value of the property in question.

Once the rateable value is established, a “multiplier” set down by the government is applied to calculate the actual amount to be paid each year.

In some parts of the country where property values have fallen, so have rateable values and thus the business rates to be paid.

But in London and the South East property has become much more expensive and so business rate bills will rise for many businesses there next year.

CVS said the rateable values of the top 50 properties, calculated as of 1 April 2015, had risen by £98m since the previous rateable values were decided in 2008.

This meant, said Mark Rigby of CVS, that the owners of these properties would pay an extra £400m over the five-year life of the new rateable valuations.

“The new Rating List shows that the big infrastructure sites – such as airports, power stations and railway infrastructure – are still dominant as the properties with the highest rateable value in the country,” said Mr Rigby.

“The offices of Bank of America Merrill Lynch in the heart of the City of London have seen their rateable value rise by more than 70% to £17m, while retailers Harrods, John Lewis and Selfridges have all seen increases of more than 50%.

“At £35m, Harrods is the retail property with the highest rateable value – 7th overall – while HSBC’s offices at Canada Square in Canary Wharf are the highest valued office at over £26m,” he added.

Although staying top of the list, Heathrow’s annual bill will in fact fall by £10m from its 2016 level, and other big payers such as Sellafield nuclear power station, and Stansted and Manchester airports, will also pay reduced bills too.

But most of the big rate payers will indeed pay more.

Gatwick airport will stay as the second biggest payer at £30m per year, and Sizewell nuclear power station will pay nearly £24m.

Others in the top 10 are Heathrow airport’s engineering base, Heysham 2 power station in Lancashire, Harrods, the Channel Tunnel, Selfridges, and Vodafone’s fibre optic network, based at offices in Berkshire.

The Channel Tunnel’s bill will rise by 114% to £16.4m, while Hinkley nuclear power station will pay 198% more at £11.8m a year.

The BBC will pay £13.4m on its New Broadcasting House headquarters in central London, up from £9.5m this year.