The Federation of Small Businesses (FSB) in the United Kingdom (UK) has described the release of draft legislation by the UK Government that would “repeal” the so-called staircase tax as a welcome development.
The staircase tax is the result of a tax court ruling which meant that businesses with offices in a building situated on non-contiguous floors were to be issued with separate business rates (commercial property tax) bills. The ruling has resulted in some businesses facing higher tax bills, most often due to the loss of small business rate relief.
The association noted that it also applied to shared lifts and communal access roads to shared car parking spaces, and saw inflated bills backdated to 2015 in England and 2010 in Wales.
The UK’s Communities Secretary, Sajid Javid, on December 29 had published a draft legislation to reverse the impact of the so-called “staircase tax.”
A news report by Tax-News.com quoted him as saying that the Non-Domestic Rating (Property in Common Occupation) Bill would mean these firms can choose to have their rates recalculated under the old single bill system and any savings due will be backdated.
He explained: “The ‘staircase tax’ is an unfair rates hike for businesses. For years these businesses in adjoining units or rooms received one rates bill, but this ruling meant they now faced multiple bills for operating in an office linked by a communal lift or stairs. I am ending this by giving those businesses affected the option of getting their rates bills recalculated and any savings due backdated.”
Commenting on the bill’s publication and the consultation, FSB National Chairman, Mike Cherry, said that “the Staircase Tax has arbitrarily penalized small firms simply because they shared a communal staircase, corridor, or even car park with another business.
“It is very good news that the Government has stepped in to repeal this ludicrous tax and I hope politicians of all parties will now back its abolition when it is put to Parliament”, Cherry added.