Future business rates reform must not push farm businesses over the edge

11 Nov 2019

gate in field

The UK Parliament’s report on the consultation on business rates was published on 31 October 2019, outlining the latest thinking on their future in England and Wales, and comes to a non-committal conclusion, calling instead for another consultation so that further thinking can be developed.

It states:

“The government should take a deeper and more holistic look at possible alternatives that would keep the benefits that business rates offer, being a secure and reliable source of revenue, whilst addressing the weaknesses. It should prepare a consultation in time for the next Spring Statement to identify potential alternatives to business rates with a view to subsequently carrying out a detailed evaluation of viable options.”

Martyn Dobinson, a partner at Saffery Champness and a member of the firm’s Landed Estates & Rural Business Group, says:

“Changes to business rates could have significant implications for the rural sector. Whilst agricultural land and buildings have historically been exempt from business rates we have seen a steady move by many farming and estate enterprises into other areas and revenue streams – renewables, tourism, farm shops, visitor attractions, and furnished holiday accommodation for example. Such moves increase the overall exposure of land-based businesses to business rates, notwithstanding that such diversification also creates opportunity for increased rural employment.

“It would be counter-productive if the future regime for business rates acted as a disincentive for diversification. It would be helpful also to clarify whether any future relief for small business will separate businesses under the same ownership, or whether those businesses under common ownership will be aggregated.

“There are many questions still to be answered both on business rates and the suggestion of Land Value Tax as an alternative, which has been flagged up again in this consultation. As the agricultural sector faces up to future trading challenges resulting from Brexit, and the transition of the Basic Payment Scheme, post 2021, to one with increased environmental focus, many rural businesses will already be under increased pressure. It would be a travesty for a new business rates structure, whether it includes agricultural land and buildings or not, to push them over the edge.”