ANNUAL BUSINESS RATES REVIEW MAY 2020
Investment in renewable energy to produce heat or power from solar technologies, biomass, biofuels, fuel cells, photovoltaics, wind, water (including waves and tides, but excluding production from the pumped storage of water) and geothermal systems should not increase overall Rateable Value and Class 2 should be amended accordingly to provide a complete exemption. Not only is it the right thing to do, such an exemption will free the time spent by the Valuation Office Agency inspecting and revaluing, releasing additional resources to expediate Check Challenge Appeal for those businesses waiting for an outcome.
LEGISLATIVE CHANGE 47% of Councils do not have a strategy in place to reduce the carbon emissions from their own buildings, offices or housing stock. Government cuts to local budgets since 2010 will make it nearly impossible for most Councils to tackle the climate crisis head-on. Councils are concerned about the imposition of any statutory duty to act over emissions without the necessary additional financial resources; a reason why green incentives through the business rates system cannot be delivered through discretionary relief.
nor reduced the long-term ongoing taxation costs but, in any event, will be abolished from April 2020. The Scheme also proved so complex that, for many taxpayers, the administrative burden of making a claim outweighed the perceived benefit. No replacement has been announced, leaving no meaningful fiscal incentives.
The Enhanced Capital Allowance Tax Scheme, where businesses can claim 100% capital allowances, written off against the taxable income of the period in which the investment is made on certain capital expenditure that qualifies as energy efficient, is also inconsistent with the Government’s objectives.
We can be more ambitious. Business rates can increase significantly if older buildings are brought up to the standard of modern equivalents. The build costs are high, and rates rise accordingly. By incentivising older buildings to be greener by incorporating high energy systems such as high-efficiency interior lighting, HVAC or hot water systems, or efficient building envelopes for example, we can encourage investment and speed up the reduction in our CO2 emissions.
A Biomass Boiler may qualify for enhanced capital allowances, for example, but a wind turbine or solar panels would not because they are energy producing. The Enhanced Capital Allowance Tax Scheme neither negated
Supply and demand, which varies across the country, and from sector to sector, will ultimately determine how much extra rent can be derived having an energy efficient building compared to one that is not. Landlords will look
at the return on investment and, with leases getting shorter, it is not clear that Landlords will always benefit from an exercise of refurbishing buildings to simply enhance the energy efficiency in isolation. The Energy Efficiency (Private Rented Sector) (England and Wales) Regulations 2015 made it unlawful from April 2018 to let commercial properties with an Energy Performance Certificate (EPC) rating of ‘F’ or ‘G’, the lowest 2 grades of energy efficiency, contributing to the increase in the number of buildings lying empty and redundant. The regulations are enforced upon the granting of a new lease and the renewal of existing leases, and from 1st April 2023, minimum energy efficiency standards will be extended to cover all leases, including where a lease is already in place. All non-domestic property types are within the scope of the regulations, except for those that do not require an EPC under current regulations, such as listed buildings.
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