New Figures to be aware of for 2010
2010 will bring changes for the UK real estate sector with regard to taxes and business rates. We set out a brief summary of theses changes.
Rateable Values
Rating legislation in the UK currently provides for all non-domestic property to be revalued on a regular basis, normally every 5 years. The last revaluation in England and Wales was effective from 1 April 2005. On 1 April 2010 new rates will become effective. The new rates are based on net rental values as at 1 April 2008. For many properties 1 April 2008 was close to the peak of the market and this would appear to be proven by the draft assessments published in October 2009. In England there will be transitional arrangements to phase in large increases in rate liability. Detailed information on how each property will be affected can be found on the Valuation Office Agency website.
A business rate supplement of 2 pence on all properties has been introduced on all properties with rateable values greater than £50,000 within Greater London. This "Crossrail supplement" will be paid towards the £18bn Crossrail project with preliminary ground works having commenced on Crossrail in central London earlier this year. It is unclear exactly how long this supplement will be in place but it is thought to be in the region of 24-30 years and there is no transitional relief available.
What can you do if you feel that a property revaluation is incorrect? There is a right of appeal against the rateable value of a property. You may wish to appeal if you consider that
- the revaluation was based on incorrect factual information;
- the unit of assessment was incorrect;
- the level of value is too high; and
- there has been a material change of circumstances.
VAT
The standard rate of VAT will return to 17.5% on 1 January 2010. Businesses will need to ensure that accounting systems are updated and/or reprogrammed to implement the change from midnight on 31 December 2009. Businesses selling goods or services during the period of the rate change must ensure the correct VAT rate is applied. There are special provisions which permit the existing 15% rate to be used in certain circumstances after 1 January 2010. However legislation is in place to prevent the abuse of these special provisions.
SDLT
From 3 September 2008 the government increased the threshold at which SDLT was payable on property transactions. Currently, SDLT is not payable on property transactions where the value of the property is £175,000 or less. However from 1 January 2010 the threshold will once again be lowered to £150,000 so that all properties valued at more than £150,000 will be subject to the 1% tax.