Legislation introduced to help businesses affected by unfair ‘staircase tax’

Communities Secretary Sajid Javid will today (28 March 2018) introduce legislation that will reverse the impact of a ‘staircase tax’, which has unfairly affected up to a thousand businesses.

A Supreme Court judgment saw hundreds of businesses that operate in adjoining units or rooms, but are accessed from a common corridor or staircase, receiving separate rate bills for each unit.

The ruling also saw businesses facing higher rate bills, with some paying more due to the loss of small business rate relief.

The introduction of the Bill means these firms will be able to choose to have their rates recalculated under the old single bill system and any savings due backdated.

Communities Secretary Sajid Javid said:

For years firms in adjoining units or rooms rightly received one rates bill, but this court ruling meant they faced multiple bills for operating in an office linked by a communal lift or stairs.

This was a completely unreasonable burden on businesses which this legislation will put a stop to.

We’re giving those businesses affected the option of getting their rates bills recalculated and any savings due backdated.

Subject to Parliamentary approval of the Bill, those businesses who have been directly impacted by the Supreme Court judgement can ask the Valuation Office Agency (VOA) to recalculate valuations based on previous practice.

It can then have its bill recalculated if it chooses, and backdated. This includes those firms who lost small business rate relief.

Further information

The introduction of the legislation follows a decision in the Supreme Court (Woolway v Mazars) which brought about a change the practice of the Valuation Office Agency (VOA) in assessing rateable values for businesses.

Following this ruling, businesses who occupied more than one property in a shared building received a separate rates bill for each unit. This was widely known as the ‘staircase tax’ and meant businesses in adjoining units who had previously received one rates bill, were now being subject to several bills. Some businesses were paying more overall due to the loss of small business rate relief – a discount applied to the bills of certain businesses with a lower rateable value.

This ruling overturned an established and widely understood practice where businesses occupying 2 adjoining floors or 2 rooms separated by a wall only received a single bill.