DEFINITELY NOT THE DARLING
Date Posted: 1/4/2008
I normally try to avoid being political, on the basis that for each client that is sympathetic to my opinion there is another one that isn’t. However, I don’t care, it has got to be said, ‘why does this government consistently increase its tax levy on the property industry?’
Anyone involved in the ownership or development of commercial property must currently feel under siege from the Brown/Darling hit squad. From 1 April 2008, 100% local rates will become payable on all empty commercial and industrial buildings, whereas previously empty shops and offices were only charged 50% rates and factories and warehouses had no rates charges at all. Can you think of any other instances where the tax imposed has gone from 0% to 100%, at a stroke? No consultation. No debate. Wham.
But there is more. Brace yourselves developers and landowners for the introduction of the ‘Community Infrastructure Levy’. Known as the ‘roof tax’ by residential developers, this will soon also apply to commercial developers and will be a tax per sq m on the floor area of buildings to be erected. Although the exact rate has not yet been determined there has been talk of it being approximately £100 per sq m, which effectively will add up to another £200,000 per acre to the development costs.
Property owners have already been told that Capital Allowances on industrial property will soon be abolished and that tax relief on landfill tax will be scrapped.
Gordon Brown already has ‘form’, having significantly increased the rate of Stamp Duty Land Tax up to 4% on properties in excess of £500,000. You don’t get anything back for your money for this tax, which, in its original form, was intended to cover the cost of recording changes of ownership or the granting of new leases. It started as a relatively modest sum to cover the administrative costs of a legal clerk doing just that. I think it was just a couple of guineas, in old money. Now it is just another revenue raising exercise. Whether you are selling a commercial property or a house – you just get taxed for no apparent reason or benefit.
Rateable Values and the Uniform Business Rates have also increased gradually over the last ten years and getting any sort of planning consent these days has become an art form, needing several expensive professionals and paying increasingly larger fees to the local planning authorities.
“Surely there’s nothing else left to tax” I thought as I settled down at the weekend and opened the newspapers. Oh yes there is ! The government’s database for Council Tax bills is being overhauled. If you’ve added a porch or have a scenic view over next door’s rockery, the one with the nice dwarf heathers, then brace yourself for another property based tax increase.
It’s enough to make us property professionals call in at the off licence on the way home and buy a beer or two. Oh yes, I forgot, the tax on that has just gone up again, and woe betide you if you have the temerity to put your bottles in a plastic bag, cos that’s going to be taxed too !