Government must assess the financial impact on councils of ‘staircase tax’ reversal, HCLG Committee says

The Government must urgently assess the potential financial effects on local authorities of legislation designed to reverse the effect of the so-called ‘staircase tax’, the HCLG Committee says today.

The Committee has published a report following its pre-legislative scrutiny of the draft Non-Domestic Rating (Property in Common Occupation) Bill.

The legislation would reinstate the method by which business rates in multi-occupied properties were calculated by the Valuation Office Agency (VOA) prior to a ruling by the Supreme Court in 2015. 

Businesses occupying two adjoining floors of a building or two rooms separated by a wall only, previously received just one rates bill, but since the ruling, separate units of property in a shared building are treated individually for ratings purposes Those businesses would now be allowed to apply for reassessment of rates retrospectively back to 2010, and the Committee has found that the financial impact on local authorities of the move remains unclear.

Clive Betts MP, Chair of the Housing, Communities and Local Government Committee, said: “The Government needs to reassure councils that they are not going to be worse off financially because of this legislation. It’s only right that if Ministers make such changes, then the Government and not local authorities pick up the bill.”

The report notes the Government has acknowledged some local authorities may see an ‘overall financial consequence’ and the Committee remains concerned that sufficient steps have not been taken to assess the potential financial effects.

The Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill was presented to Parliament on 28 March, and the Committee’s report is also critical of the Government for failing to notify it of its plans and for not providing the responses to its public consultation in advance.