Reform would enhance productivity and international competitiveness.
Britain’s manufacturers are calling for rateable plant and machinery to be excluded from business rate revaluations in the future in order to provide a more stable and predictable environment for investment to boost productivity in the long-term.
Making the call in its submission to HM Treasury’s review of business rates, EEF the manufacturers’ organisation believes that the current inclusion of plant and machinery effectively represents a tax on productive investment and puts UK industry at a disadvantage with competitors in the EU, where plant and machinery is excluded from the calculation of non-domestic property taxes.
Commenting, Paul Raynes, Director of Policy at EEF said:
“Manufacturing is more productive and investment intensive than the average business, but that means manufacturers are penalised with a big extra rates bill on its plant and machinery investments. That is a deterrent for manufacturers operating globally to make their next investment in the UK, because our competitor countries don’t tax investments in productivity growth as if they were bricks and mortar. Reforming the rates penalty for investment would be good for productivity and good for the balance of trade.
“This review of the rates system has shown that the case for moving to a fundamentally different system has not been made. But a big improvement that can be implemented within the government’s sensible timescales would be the removal of plant and machinery from site assessments.”
Andy Pickford, Tata Steel Property Director added:
"Having recently made significant investments into our Scunthorpe steelworks we were deeply disappointed to see our business rates bill for that site go up by three quarters of a million pounds a year as a result. This is a clear disincentive for investment in the UK, penalising those who want to improve their productivity and environmental performance."
In its wider submission EEF also believes that business rates should remain a property tax, with the fundamental structure of the present business rates system – site specific rateable values, five year revaluation periods and a multiplier set at the national level – maintained. These fundamentals ensure a stable cost environment for manufacturers.
EEF has also made the following recommendations:
Shifting from RPI to an annual average CPI for the uprating of bills, which is less volatile, thus resulting in lower and more stable bills
Extending empty property relief for industrial buildings from 6 months to 12 months to reflect the difficulty in renting and selling industrial properties, due to their unique nature
Business investments to improve the use of energy and with it business productivity should be treated in a neutral way and not, as at present, increase the business rates liability of properties