Tax Strategy Hurting Businesses

Call to end tax on vacant properties

A group of the largest property owning companies have called on the government to scrap or amend legislation covering business rates on empty properties in the pre-Budget report.

Companies began paying full rates on vacant properties for the first time this year, following an initial grace period. It has been criticised as an extra financial burden on an already struggling property sector.

Many companies and organisations outside the sector also own real estate, including pension funds. Local councils have suffered as they also pay tax on empty properties. Campaigners say the tax is stifling regeneration.

The letter to Gordon Brown has been signed by companies with a combined market capitalisation of £370bn.

These include companies from AstraZeneca and McDonald’s to Next, Tesco and Nokia, as well as Land Securities, British Land and Canary Wharf.

Segro and Brixton, among the other supporters of the letter, which was collated by the British Property Federation with Property Week magazine, estimate that the tax will cost them £8m and £5m this year respectively.

The letter asks for a 50 per cent relief on the tax for shops and offices for two years, and an indefinite stay on industrial buildings.

The government scrapped a former relief for empty properties in April. It estimates the move could generate up to £1bn in extra revenue.

The Communities and Local Government Department said: “There are no plans to reverse the changes to empty property rate relief introduced on April 1. However, as with all taxes the position is kept under review and the government has engaged with industry and local authorities to understand how the reforms are working overall.”

Ian Coull, chief executive of Segro, said: “This outrageous piece of taxation is hitting the whole of the British economy at a time of severe downturn.”

Source: FT; By Daniel Thomas
Published: October 23 2008 22:47 | Last updated: October 23 2008 22:47