According to HMT, “Recurrent taxes on the value of property are a longstanding feature of the tax system in England. The business rates system continues to hold many advantages over other types of tax: rates are easy to collect and provide a stable source of revenue to local government. Business rates are forecast to raise £26 billion in 2024-25 and make up a quarter of Local Authority core spending power. They support critical local services, including child and adult social care.”
Whythawk was contracted by Attis Towns on behalf of Heart of London Business Alliance to provide data and analysis using our commercial location data project to support a formal response to proposed changes to the rates system.
Our solution
Commercial rates are a legal requirement and must be paid on all hereditaments considered to be in a lettable / habitable state. In practical terms, these are individual, unique commercial units at specific addresses.
For England and Wales, these data are developed and maintained by the VOA. They release updates to their 2010, 2017 and 2023 ratings lists fortnightly, issuing adjustments to valuations of existing hereditaments, or removing and adding hereditaments to the list. Each is assigned a category of use (SCAT) from a list of 457 types.
Hereditaments themselves may include multiple distinct components (storerooms, offices, mezzanine floors, etc.), each rated according to their classification, but being summed to a total floor area and rental valuation for each hereditament. For the sake of simplicity, we do not consider these subcomponents in our analysis but use only the total hereditament data.
The queries requested for this study are for summations and counts with the dimensions:
- Sectors:
- Retail, hospitality and leisure (RHL): there is no generally agreed definition for SCAT codes as corresponding to RHL but we have a specific definition that has been developed in conjunction with UCL and BEIS, and used in multiple research projects across the UK by academia and government. This is available for review. In the absence of formal agreement, this is the best available definition.
- Distribution warehouses: the objective is to compare to Amazon’s distribution centres and so these were identified and then the SCAT codes (“096”, “151”) were used as filters.
- Rateable value thresholds:
- Less than £51,000
- Between £51,000 and £500,000
- Greater than or equal to £500,000
- Rates scenarios:
- 10p increase on the rates multiplier, for specific sectors and rateable value thresholds
- 20p decrease on the rates multiplier, for specific sectors and rateable value thresholds
The queries themselves were direct database queries of the source data, with filters as described. Aggregations by rates authority were conducted using a geospatial boundary filter to match to the existing boundaries.
Outcomes
Our research formed part of the public submission from HoLBA. This process will take some time to reach a conclusion.
