What types of plant and machinery are included in business rates calculations?

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In towns across England and Wales, the Valuation Office Agency is currently travelling around reassessing the value of all non-domestic property as part of business rates revaluation.

For industry, this reassessment will include plant and machinery classed as 'integral' to the building – a tax on productive investment

This is something we’ve previously blogged about.

Here is a small selection of plant and machinery items currently included in the calculation of bills. The installation of these automatically increases your business rates tax liability as a manufacturer:

  • Blast furnaces, coking ovens, shiplifts and building berths, turbines and generators, boilers, washeries for coal, silos
  • Steam boilers, steam engines, air compressors, fans and blowers and pumps and other water-lifting apparatus
  • Tanks, fire alarm systems and security and alarm system

A full list of items is included here

Analysis by EY shows that around 17% of receipts from taxing plant and machinery as part of the business rates system, is borne by the manufacturing sector. This figure rises significantly if you strip out the utilities sector (where very few buildings exist to be taxed).

That this aspect of the system disadvantages manufacturers compared to other industries is no surprise

The last time the list of what should and shouldn't be included in business rates calculations was looked at was 1994. The nature of industry and the economy has changed since then, but we still carry the burden.

Our recommendation to government as part of their structural review of business rates, we called for plant and machinery to be removed from rateable value assessments.

Such a move would gear the system towards supporting those wishing to make productive investments.

 

Author

Head of Business Environment Policy

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