Higher rate represents huge threat to Wales’ competitiveness
Wales is facing a huge potential blow to its competitiveness as a trading location as a result of the forthcoming rating revaluation, with the business rate from April onwards set to be a massive 11% higher than in England.
Although the Welsh business rate for 2017/18 is yet to be announced, a summary of the 2017 revaluation assessments published by the Valuation Office Agency implies a tax rate of 52p up from 48.6p this year; in comparison, the English equivalent will actually fall from 48.4p currently to 46.7p.
The news puts into sharp focus the disadvantage that Welsh businesses will face relative to their English counterparts, with a tax rate some 11% higher than will be applied over the border. The full impact of next year’s revaluation will be revealed on Friday when the draft rateable values become available.
Helen Edwards, a rating expert based at Gerald Eve’s Cardiff office, said: “For Welsh firms to face a rate of tax some 11% higher than their English rivals is unsustainable. They are not asking for special treatment, merely to operate on a level playing field. They will pay the price for an unfair system that treats businesses as a cash cow to be milked.”
Although the devolution of business rates to Wales, which was implemented fully last year, ostensibly gives the country control over its own rates bills, the requirement for overall revenues to remain the same in real terms after the revaluation has led to the predicted rise. The Government in England has been able to reduce the UBR because property values in London have continued to increase through the recession and businesses there will pay more, but without London the revaluation is going to hurt more in Wales than England.
Helen Edwards continued: “To have such a huge disconnect between the business rates of England and Wales is clearly a sign of system in desperate need of reform. The overall burden needs to be lower, but there also needs to be more harmonisation between the two countries. It is all well and good talking about devolved power, but in practice it is Welsh businesses who are paying the price, putting them at significant disadvantage.”