Business rates retention is important for local authorities, with councils increasingly having to stretch budgets and give more for less it is a way for them to increase the money they receive by way of business rates income.

What is it?

In a nutshell, it is any new business rate income, be this from a commercial property built from scratch, extended or renovated or even property that has been converted from residential to commercial use or a property that has been zero rated but can now be taxed.

Of this new income the local authority is entitled to keep up to 50% as it is deemed newly generated income. This incentivises councils to seek out ratable premises so that they can increase the amount of money they receive to deliver services to their residents.

The Government aims to continue to increase the amount that authorities can keep with 75% being the next pledge with 100% being the amount they will eventually get to keep in 2020.

What should local authorities be doing?

Local authorities should be doing all they can to tackle under assessed properties and to identify properties that should fall under non- domestic rates.

Property inspection and data analytics technology can be used to effectively assess properties, this is something that Preston and Lancashire has seen success with and you can download a case study here.

Data insights can enable effective forecasting and gathering intelligence can help predict how long new developments will take to be taxable premises.

Tackling avoidance

If there is property whereby there is an exemption in place, or where there are a series of tenants who stay only six weeks then the property should be visited by an inspector.

Inspectors should also visit any property that seems suspicious an art gallery without a website is one such example, another might be premises used for charity but is a warehouse.

If the Valuation Office Agency has deemed the property beyond economic repair local authorities must ensure that this verified on a regular basis.

If the property is zero rated

Zero rated properties must be wholly or mainly used for the purpose identified, again this is something worth regularly checking and cross referencing with companies’ house data and visiting if something doesn’t appear to be adding up.

There are commercial property agencies that create guidelines for landlords on how to reduce empty property business rates liability you can find one such example here. It is worth knowing and understanding this and therefore to be on the look out for landlords or tenants trying to reduce their liability so that as a local authority you can challenge it.