Business rate payers in Aberdeen could be facing an increase in bills as Assessors embark on the latest Rating Revaluation.
With the process for adjusting business rates now underway, the Scottish Assessors will use rents as at 1 April 2015 (known as the Tone Date) to calculate future business rates liability from April 2017.
A potential problem for Aberdeen businesses is that bills will be based on rental values from a high point in the market. Unfortunately for rate payers in the Granite City, the situation was the same at the 2010 Revaluation.
With the city so reliant on the oil and gas industry, levels of activity in the sector influence occupational demand, and in turn, rental values for commercial property throughout the region. As has been well publicised, the oil price has fallen significantly since mid 2014, from $115/barrel, to a low of around $45 in January 2015. The downturn will likely have some effect on sectors of the local occupational market, however the full impact of this is unlikely to be ascertained until later this year and potentially in to 2016. It will also be dependent upon the length and magnitude of any recovery in the oil price - or otherwise - but the Assessors will not be able to take this into account when they make their calculations.
Another issue is that the Uniform Business Rate (UBR) – the multiplier used to calculate business rates – is set to change, with a potentially negative impact on Aberdeen.
Rates bills are calculated by multiplying a property’s rateable value by the UBR. The rateable value is based on rents and calculated by the Assessor in each region. The UBR is set by the Government and is based around the income it requires to raise from business rates for the Scottish budget. Set annually, the UBR is normally adjusted downwards at revaluation to reflect the overall increase in rateable values in Scotland but because rents haven’t risen across most of the country, it is likely to increase to compensate for the shortfall in rates income. Because rents in Aberdeen have remained high, an increase in the UBR may translate into higher bills for ratepayers.
Meanwhile, occupiers are being sent an important document – Returns of Information forms. Ryden advises that these complex documents should be carefully completed by a qualified surveyor from the Royal Institution of Chartered Surveyors. They must also be submitted by the deadline with the current rent and all other information required by the Assessors to avoid costly mistakes in bills.
For more information on business rates, contact Lorna Greig.