Tax & admin · 29 March 2018

Government begins reversal of controversial staircase tax

Business owners affected by the staircase tax will receive new business rates bills

New legislation to repeal so-called “staircase tax” has been announced by the government, with a promise of backdated payments to affected business owners.

Government communities secretary, Sajid Javid, announced a new bill to implement the reversal of the tax which unfairly targeted up to one thousand UK businesses.

The introduction of the bill allows all business owners affected to have their calculations reassessed under the old single bill system.

Commenting on the bill, Javid said: “We’re giving those businesses affected the option of getting their rates bills recalculated and any savings due backdated.”

Subject to parliamentary approval of the bill, business owners directly impacted by the staircase tax can ask the Valuation Office Agency (VOA) to recalculate valuations.

Since August 2017, a landmark Supreme Court ruling had affected business owners who occupied more than one floor in a shared building.

Under the ruling, business owners began to receive a separate business rates bill for each unit, rather than a shared rate.

Read more about recent business rates revaluation:

“For years, firms in adjoining units or rooms rightly received one rates bill, but this court ruling meant they faced multiple bills for operating in an office linked by a communal lift or stairs,” said Javid.

The ruling also saw business owners face higher rate bills, with some paying additional costs due the withdrawal of small business rate relief.

Javid added: “This was a completely unreasonable burden on businesses which this legislation will put a stop to.”

Firms who lost small business relief also have the option to have bills recalculated and any savings backdated.

The initial change was the result of a ruling in the Supreme Court, in the Woolway v Mazars case, which the VOA said had clarified the law and given it no choice but to send the fresh demands.

The Federation of Small Businesses (FSB) estimated that 80,000 properties were affected by the steeper charges and said the levy was “ridiculous”.

Chancellor Philip Hammond first signalled the abolition of the levy in his Autumn 2017 Budget announcements, having “listened” to the concerns of small business owners.

The president of business rates at ratings agency Altus Group, Alex Probyn, commended the government for acting on Hammond’s Budget commitment.

“The publication of the regulations reaffirms the Budget commitment to rid the system of what became a ‘stealth tax’ and returns businesses back to the position they were in before the ‘Mazars’ ruling. The government should be commended for acting quickly and decisively,” Probyn said.


Staircase tax

 

Spring Statement: Business rates revaluation brought forward to 2021

Chancellor Philip Hammond used the Spring Statement to confirm the next business rates revaluation will take place in 2021, a year earlier than planned.

 


 

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ABOUT THE EXPERT

Carly Hacon is a reporter for Business Advice. She has a BA in journalism from Kingston University, and has previously worked as a features editor for a local newspaper.

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