Business Rates Reform - Easy as Pie and (data) Mash(up)
Business Rates - not exactly a sexy topic but as highlighted by this BBC News article, it's something of huge importance to the UK economy and many businesses both old and new trying to grow in a world of online retailers and a slowly recovering economy.
As detailed helpfully on the gov.uk site, business rates are basically the non-residential equivalent of Council Tax. Premises are taxed annually to pay for services like rubbish collection, street lights and so on.
While some types of property are exempt, the rates affect offices and shops with some types of organisations and areas subject to various forms of discounts. Complicated!
Now, with rates calculated by the Valuation Office Agency (in England & Wales at least) based upon the value of the property (similar to the Council Tax banding process with the occasional re-assessment) and a multiplier set by central Government (linked to inflation); there are inevitably going to be some businesses get better value for money than others. So what are the problems and how could we solve them?
A recent report by the government focussed on the state of high street retail in the UK and made some sensible points. 25% of all business rates are paid by the Retail sector with only the Banking and Oil & Gas sectors paying more (at least, within the FTSE 100) and some retailers identifying that rates are higher than rent in some cases.
Have a think about this last point - would you want to pay more in Council Tax than Rent? Crazy isn't it?!
This report and the BBC News story go on to say that there is a growing movement to change how business rates are calculated. So, how could this be done efficiently and could data help?
Let's start off with the property being used by the business. Does it have attributes other than the basic value that could be used? Well, yes. You could take into account the efficiency of the building (using EPC data), the services available to it (does it have the right gas supply for a restaurant?), proximity to car parking, major road and rail connections and what surrounds it (e.g. if you want to start a sandwich shop, having lots of offices nearby is going to be good for you).
So it's pretty clear that other elements on top of property value could be used to calculate a tax. What about the business? Could you take into account the type of business, its age, turnover, number of employees and so on? Again, yes you could.
It's pretty clear that a number of public and private data assets already available today could be used to create a simple and fair rating system which could also be turned to encouraging new types of businesses to open in certain areas - for example, give any new independent sandwich shops opening next to a major office development money off their rates versus fast food restaurants (sorry guys, no burgers for lunch!).
This debate is still happening and it's going to be quite a while before there's any change. However, it's pretty clear that data could provide a more equitable and reactive system for business rates.
As detailed helpfully on the gov.uk site, business rates are basically the non-residential equivalent of Council Tax. Premises are taxed annually to pay for services like rubbish collection, street lights and so on.
While some types of property are exempt, the rates affect offices and shops with some types of organisations and areas subject to various forms of discounts. Complicated!
Now, with rates calculated by the Valuation Office Agency (in England & Wales at least) based upon the value of the property (similar to the Council Tax banding process with the occasional re-assessment) and a multiplier set by central Government (linked to inflation); there are inevitably going to be some businesses get better value for money than others. So what are the problems and how could we solve them?
A recent report by the government focussed on the state of high street retail in the UK and made some sensible points. 25% of all business rates are paid by the Retail sector with only the Banking and Oil & Gas sectors paying more (at least, within the FTSE 100) and some retailers identifying that rates are higher than rent in some cases.
Have a think about this last point - would you want to pay more in Council Tax than Rent? Crazy isn't it?!
This report and the BBC News story go on to say that there is a growing movement to change how business rates are calculated. So, how could this be done efficiently and could data help?
Let's start off with the property being used by the business. Does it have attributes other than the basic value that could be used? Well, yes. You could take into account the efficiency of the building (using EPC data), the services available to it (does it have the right gas supply for a restaurant?), proximity to car parking, major road and rail connections and what surrounds it (e.g. if you want to start a sandwich shop, having lots of offices nearby is going to be good for you).
So it's pretty clear that other elements on top of property value could be used to calculate a tax. What about the business? Could you take into account the type of business, its age, turnover, number of employees and so on? Again, yes you could.
It's pretty clear that a number of public and private data assets already available today could be used to create a simple and fair rating system which could also be turned to encouraging new types of businesses to open in certain areas - for example, give any new independent sandwich shops opening next to a major office development money off their rates versus fast food restaurants (sorry guys, no burgers for lunch!).
This debate is still happening and it's going to be quite a while before there's any change. However, it's pretty clear that data could provide a more equitable and reactive system for business rates.
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