Coronavirus: UK government considers reducing office business rates by almost £500m

Kumutha Ramanathan
·2 min read
The financial district is seen in a view across the River Thames in London, June 22, 2010. Britain slapped a 2 billion pounds ($3.1 billion) tax on bank balance sheets on Tuesday as the new government said the industry must pay the price for its part in the financial crisis.   REUTERS/Paul Hackett   (BRITAIN - Tags: POLITICS BUSINESS CITYSCAPE)
Offices which appealed their rates bills could get a 25% rebate. Photo: Paul Hackett/Reuters

The UK government said it’s considering reducing office business rates by almost £500m ($677.82m) as the nation continues grappling with the economic fallout from COVID-19.

Offices which appealed their rates bills could get a 25% rebate.

While UK chancellor Rishi Sunak agreed to suspend business rates for shops, cafes, restaurants, hotels and a number of companies due to the coronavirus pandemic, offices were billed as normal.

Around 150,000 appealed the decision as buildings were left empty following workers increasingly working from home in the face of looming restrictions.

“No decisions have been taken on reductions to rateable values as a result of the pandemic,” the Valuation Office Agency (VOA) told Yahoo Finance.

“Discussions with the rating profession are ongoing but it is far too early to speculate on the outcome. Understanding the impact of the ongoing pandemic on rateable values is a complex legal and valuation issue. We are working to resolve these cases as quickly and efficiently as we can.”

UK public sector borrowing reached a new record in November.
UK public sector borrowing reached a new record in November. Chart: ONS

The VOA added that its role is in setting a rateable value for local authorities to then use to calculate business tax rates. As such, it wouldn’t be up to the department to “write off” rates, as has been suggested by other media.

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"The interim settlement paves the way for an initial rebate worth up to £481m for the office sector,” said Robert Hayton, head of property tax at Altus Group, Britain's largest ratings advisory, told the BBC.

The news comes as UK businesses struggle to shrug off the COVID-19 impact.

The move by the government to cut taxes for hospitality firms and suspend businesses rates was part of its wider efforts to stem the tide of bankruptcies and foreclosures among UK businesses.

The latest government figures for public finances in November showed that public sector net borrowing reached £31.6bn, which is £26bn more than in November 2019. According to the Office for National Statistics, this was the highest November borrowing and the third-highest figure since monthly records began in 1993.

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