More than 1,500 retail shops within the City of London could see their business rates bills slashed by up to £33 million a year following a ruling from the Valuation Tribunal for England.
A contentious dispute arose around the value applied to the main space of a City of London shop by the Valuation Office Agency, an executive agency of His Majesty Revenue & Customs, following the 2023 revaluation of business rates.
The dispute culminated in an independent panel, which hears business rates appeals, ruling that the rateable value of a shop in the City of London should be reduced from £287,500 to £179,000, a 38% reduction.
The shop, located on the south side of Cheapside – the prime City retailing street – on a corner with Bow Lane, a busy pedestrianised thoroughfare with Bank and St Paul’s Underground Stations within easy walking distance, is one of more than 1,500 similar retail properties within the City of London from the perspective of relative value comparison.
The disputed issue was the zone A rate applied of £2,725 to the property to determine the 2023 rateable value which was reduced by the Valuation Tribunal to £1,700 seeing the rateable value of the property slashed.
Zoning is used to apply the price per square metre to a property in order to get the rateable value used to calculate business rates bills. Zone A starts at the front of a shop including any window display area is considered the most valuable space.
According to the commercial real estate intelligence firm Altus Group, there are a total of 1,540 retail premises within the City of London with a combined rateable value of £157.3 million used to calculate business rates bills until 31st March 2026 which could now be impacted by the tribunal ruling.
The most recent revaluation came into effect in England and Wales on 1st April 2023, based on rateable values from 1st April 2021, when the country was still gripped by the pandemic and at a time there had been a collapse in demand for new leases.
Alex Probyn, President of Property Tax at Altus Group, said “the agency had an unenviable task in producing more than 2 million non-domestic property valuations against that backdrop. It was always going to be the most subjective revaluation yet and there was always going to be significant sectoral and regional corrections needed.”
Probyn added “the 2023 revaluation needs a serious revisit through the urgent determination of outstanding challenges to ensure that ratepayers are paying the correct level of tax.”
