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30.07.2009
A leading business rates adviser has suggested the Mayor of London has overestimated his calculations for his Crossrail Levy on business rates and called for it to be reduced by 20%.


The Mayor today published a prospectus for consultation, under which many large businesses in London will be required to pay at least a 5% supplement on their business rates bills for between the next 24 to 30 years commencing next April. The supplement, which will be used to assist funding the development costs of Crossrail is to be paid by all London businesses whose Rateable Values exceed £50,000 at a rate of 2p per £ Rateable Value.

Jerry Schurder, head of business rates at Gerald Eve, which advises 40% of the FTSE 100, said: “The prospectus clearly and helpfully sets out details of the expected development costs of this essential project for London, the timetable and the amounts to be generated from the Business Rate Supplement, but it appears to underestimate the increase in London’s rateable value base that will arise from the revaluation that will take effect in April.

“The Mayor has assumed that the new assessments will be about 15% above those presently in force, but the revaluation effects revealed in CLG’s consultation paper on 8 July imply at least a 30% growth in rateable values. Furthermore, may properties that will previously have fallen beneath the £50,000 threshold and therefore exempt from the supplement, will find in 2010 that their values have increased and will have to pay the full supplement.

The prospectus quotes the Mayor as saying ‘ we will consider the impact of the 2010 business rates revaluation before publishing the final arrangement for the business rates supplement by the end of January 2010’.

Schurder urged the Mayor to adopt the lowest possible supplement at least in the initial years, to assist London’s businesses through the recession. “My expectation of the outcome of the 2010 revaluation and analysis of the Crossrail funding requirements, suggest that the levy could be reduced by 20% to 1.6p.”

Schurder added: “With the Uniform Business Rate next year expected to be about 40p per £ of rateable value a 2p Crossrail Business Rates Supplement will add at least 5% to liability at a time when businesses need to reduce costs, not increase them. Many ratepayers in inner London will see their rateable values increase by well in excess of London’s 30% average but they will not face those increases immediately in 2010 as the Government plans to cap increases in rates bills at 12.5% in real terms. An average medium sized business in London, whose rateable value increases from £100,000 now to £200,000 after the revaluation, will see its business rates bill increase from £48,500 this year to £53,000 next year. The Crossrail supplement of £4,000 – adds another 8.2% on to this year’s bill”.

Schurder appealed to the Mayor to remember his calls to the government to reduce business rates. “Businesses regard Crossrail as a essential project, but may feel aggrieved at having to pay a supplement for at least 7 years before they receive any benefits once the trains start running. The Mayor has called on the Government not to increase business rates following revaluation in order to support business recovery – they will expect him to do whatever he can to help them, by keeping the Crossrail levy as low as possible”.


Gerald Eve, chartered surveyors and property consultants, make or save money from property - acting for around 40% of the FTSE100 on property asset management, agency and professional matters.