Tax & admin · 2 January 2018

Government starts repeal of staircase tax with promise of back payments

Firms sharing communal staircases and corridors have been liable to pay the staircase tax
Firms sharing communal staircases and corridors have been liable to pay the staircase tax

Draft legislation has been published to revoke the so-called “staircase tax”, as the government pledges to recalculate business rates and payout backdated savings for those affected.

After mounting pressure from the small business community, government communities secretary, Sajid Javid, announced that a new repeal bill will pass through the Houses of Parliament while a public consultation will seek the views of business owners.

Under staircase tax rules, companies operating over several floors within the same property are handed separate business rates assessments for each occupied floor, as opposed to one bill for the entire premises. The backdated tax was initially introduced after a landmark Supreme Court ruling in August 2017.

Now, Javid has confirmed that affected business owners will have business rates bills recalculated under the old single bill system, with any savings to be paid out by government.

Read more: Business rates hike could lead to “tsunami” of high street closures

Commenting on the draft legislation, Javid said the unpopular levy had represented an “unfair rates hike” for business owners.

“For years these businesses in adjoining units or rooms received one rates bill, but this ruling meant they now faced multiple bills for operating in an office linked by a communal lift or stairs,” he added.

“I am ending this by giving those businesses affected the option of getting their rates bills recalculated and any savings due backdated.”

Welcoming the draft legislation, Mike Cherry, chairman of the Federation of Small Businesses (FSB), said the staircase tax had “arbitrarily penalised” firms for sharing communal staircases, corridors or even car parking with another business.

“It is very good news that the government has stepped in to repeal this ludicrous tax and I hope politicians of all parties will now back its abolition when it is put to Parliament,” he said.

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

Cherry added: “Senior ministers, including Sajid Javid and Philip Hammond, have taken this decisive action after listening to the concerns raised by FSB and its members.

“We look forward to taking part in the government’s consultation to make sure this legislation is right and that all small businesses affected are reprieved without delay.”

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

“The publication of the draft 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.

Find out the business rates loopholes you need to know as the owner of a small company

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



Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.