Tax & admin · 18 September 2017

How landlords can help lower the impact of the staircase tax

A separate tax bill will be issued for each office space a business occupies, separated by a communal area
A separate tax bill will be issued for each office space a business occupies, separated by a communal area

Business owners impacted by the government’s unpopular staircase tax could be helped by landlords to reduce future liabilities, according to one UK business rates expert.

According to Martin Cook, the head of rates and lease advisory at KWB, a West Midlands-based commercial property agency, landlords could change leases to include common office areas, such as corridors and staircases, linking an occupying business’s premises together.

Landlords could then grant additional rights to other tenants in the building who may not be affected by the staircase tax to also use those same common office areas.

“Some landlords have already done this for major occupiers in their buildings, particularly those occupying consecutive floors, and it can work very well,” revealed Cook in a statement.

“If a tenant’s office spaces are close together then landlords may very well agree to the change, helping to mitigate current and future bills, as all the office space occupied by one tenant will be classed as one assessment.  Unfortunately, this probably won’t affect backdated demands – only from the time the change is made.”

More than 30,000 small business in England and Wales are likely to be affected by the staircase tax, with those occupying several rooms inside a multi-let property most likely to be impacted.

The staircase tax demands that separate tax bills be issued for each office space a business occupies that are separated by a communal area, like a staircase, corridor or elevator.

The Valuation Office Agency (VOA) – the government body responsible for setting business rates – has said that it had no choice but to change the rules on multi-let properties following the Supreme Court judgement on the Mazars vs Woolway case in 2015, which the VOA claimed had “clarified the law” on the issue.

Cook went on to explain that the staircase tax was proving particularly unfair for firms that would otherwise benefit from 100 per cent business rates relief.

He said: “Because they are now receiving rates bills for each separate office space they occupy, businesses which previously received a single rates assessment and thought they would pay nothing, now face demands for thousands of pounds a year, plus a further demand for backdated payments for their split assessments.”

Staircase tax: Pressure mounts on government to scrap unfair rules  

Will the staircase tax increase your firm’s business rates?

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

On the up