Poundage rates for Scotland and England

Tories In Disarray Over Business Rates

One of the main lines of Tory attack for the upcoming council elections is the increase in business rates. The Tories love to portray themselves as THE pro-business party, so they’ve been pushing this theme relentlessly. All of the sycophantic media has been slavishly publishing the Tory propaganda. So I thought we should take a look at the issue and see if the Tory claims bear close scrutiny.

What are business rates?

Here’s how they are described on the myscotgov website: “Business rates (also called non-domestic rates) are a tax on business property to help pay for local council services. They are based on the property and generally don’t reflect the turnover or profits of your business. If you have business premises, it’s important to consider business rates in your financial planning.”

So business rates are based on the property value, not the profitability of the business. Its stands to reason then that if the property value increases then the business rates increase also. There’s even a kind bit of advice on the website, best keep those rates in mind when doing your financial planning. I’m sure most well run businesses would heed that advice.

Who decides on the value of the property?

As we all know, property values vary over time. If we want businesses to pay the correct amount then their properties must be revalued from time to time; in Scotland this is carried out every 5 years. This valuation is performed by the Scottish Assessors Association who are an independent body. The assessors for each area are appointed by a cross party committee of councillors, one of the Aberdeenshire Council Committee members was Cllr Gillian Owen, Conservative and Unionist Party. So if the Tories are complaining about the valuations, they only have themselves to blame.

How are business rates calculated?

Once the rateable value of the property has been determined then the business rates can be worked out. The Scottish Government sets the rate which is known as the poundage rate, i.e. how many pence in the pound will be charged. The poundage rate normally increases with inflation (RPI) and it also matches the increases in England. The Eric Young & Co website has the details:

Poundage rates for Scotland and England

Poundage rates for Scotland and England

So we can see that the poundage rate increase for properties valued below £35000 is exactly the same as the English rate for properties below £18000. The more expensive properties then have to pay a Large Property Supplement. In England this starts at a lower rate than in Scotland (1.3%) but the Scottish rate is higher (2.6%).

What’s the problem?

With the increases being closely matched then you would expect there to be howls of discontent in England too. Poor Victoria Beckham’s store rateable valuation is up 415%. But it can’t be the annual increase that the Tories are moaning about , it must be the revaluation

What does the UK government have to say about it? Well a government spokesman said, “This revaluation improves the fairness of rate bills by making sure they more closely reflect the property market.”

Oh, according to the tory government in Westminster the revaluation improves fairness. The message couldn’t have reached the branch office then because Ruth Davidson says this on the branch office website, “This revaluation is threatening jobs and the wider economy, and needs to be addressed as a matter of urgency.”

Which is it? Either fairness is improved or jobs are threatened, I’m a bit confused.

Perhaps Murdo Fraser can enlighten us?

He says, “This is fast becoming a crisis for businesses the length and breadth of the country. Many say they face closure, while others are being forced to hike their prices to cover these increased costs. This is not an acceptable state of affairs, and we need to know what Scotland’s finance secretary intends to do about this. It’s time for the SNP to prove it’s not an anti-business government and take some meaningful action to help these businesses which are the lifeblood of our economy.”

So the SNP government is anti-business, what does that make the Tories in Westminster then?

Hmm, maybe we can get some help from the tory candidates for the upcoming council elections?

Here’s Colin Clarke, currently the Conservative and Unionist party councillor for Inverurie and district.

“Inverurie has a thriving town centre with a strong High Street shopping culture, but local firms are being squeezed by SNP tax policy. We should be supporting our employers, especially during the current downturn in the north-east economy. Many of these are family firms with strong links to the local area, but they are being hit with ever-increasing bills. I want to see a freeze on business rates to offer some relief to these companies which are finding it tough at the moment.”

So the increase doesn’t support employers in Scotland but improves fairness in England.

He goes on to say, “At the moment, it seems the SNP see the north-east and towns like Inverurie as a cash cow, with rising income tax, stamp duty and business rates providing a triple whammy of higher bills”

Oh dear Colin, you’re a liar. There has been no increase in income tax in Scotland. The income tax rate next year is exactly the same as it was last year. In fact most people will paying less income tax next year than they did this year due to the lower earnings limit being raised.

Perhaps former Provost Councillor Jill Webster can enlighten us? She gets a mention in the Evening Express. “Cllr Jill Webster said her own manufacturing business faces a six-figure increase which was “quite shocking”. She added: “The Finance Secretary should have done something about this one earlier and rushed this North-east situation on earlier.””

A six figure increase! That sounds dramatic, lets take a look at this claim then:

Cllr Webster,or Jilly as she’s known, runs a couple of businesses at the same time as being a councillor. She does this on a part-time basis we are told, does that mean she is a part-time councillor? Anyway the businesses in question are Rubberatkins Ltd and Reactive Downhole Tools Ltd. A quick search for the Rubbertkins business yields the postcode AB23 8GW.

Lets see how much the rateable value has increased by entering the postcode into the search engine on the SAA website. This tells us the current rateable value is £209000. Looking at the proposed valuation on the same page we see that it will be £307000, that’s an increase of £98000. But that is the rateable value, not the actual business rate, which can be estimated by the business rate calculator on the mygov website. This yields a business rate of £151044.

Rubberatkins business rates 2017

Rubberatkins business rates 2017

But Jilly said that her business faced a six figure increase, so at least £100000 then. Lets work it out shall we?

Her old rateable value was £209000. The old rate was 48.0% up to £35000 then 49.3% above that. Which give us £12250 + £85782 = £98032. So the increase is £53012. It looks like Jilly can’t do her sums.

I wonder what could have cause the increase in the rateable value? Could it be the 1000 square meter extension to the business premises that is mentioned on the company website? Looks like our Jilly didn’t heed the Scottish Government’s advice to “consider business rates in your financial planning.” If she did then she would have seen the business rate rise coming.

So there we have it, the Tories say that the business rates rise is about improving fairness in England but is all kinds of SNP bad in Scotland. Tories’ council candidates lie and can’t do their sums. Who would vote for them?

 

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