Rates Bills 2017-18
The Northern Ireland (Ministerial Appointments and Regional Rates) Act 2017 was introduced by the Secretary of State for Northern Ireland last month. It set a 2017/18 Regional Rate for Northern Ireland which was uplifted in line with inflation. Rates bill have now issued to households and businesses from Land & Property Services (LPS).
The Small Business Rate Relief scheme has been extended for the 2017/18 and has been applied automatically to rate bills as normal.
Play your part in Rates Rethink process - Ó Muilleoir
Finance Minister Máirtín Ó Muilleoir has published a consultation paper on the package of measures announced on the 22nd November. This initiates a nine week consultation period, ending on 16 February 2016.
The Minister said: “My Rates Rethink proposals are the biggest package of reforms to our rates system for a generation. I want to see a modern, fairer rates system, which encourages regeneration, investment and entrepreneurship, while at the same time discourages dereliction and decline.
“The changes I wish to take forward have fairness at their heart with everyone contributing according to their ability. They have three underlying objectives. Firstly, to spread the burden wider, secondly to be more discerning with the application of reliefs and allowances and finally, to use the rating system as a lever of social and economic development.”
The proposed measures include:
- a new £22m a year Rates Investment Scheme for smaller retail and hospitality business
- piloting Business Empowerment Zones in two areas (Lower Newtownards and Lower Falls Roads)
- increasing rates on empty commercial properties
- Charity shops to make a contribution
- charging the highest value homes more
- removing the early payment discount
- reducing landlord allowances
- Student halls of residence to start paying rates
- a 3 year rates holiday for first residents of new energy efficient home.
The Minister added: “It is vitally important that we get these changes right for future generations to help build growth across our society and that’s where you can play your part. This consultation will give everyone the opportunity for their voice to be heard on these important issues.
“I would strongly encourage people to respond to this consultation so that collectively, we create a 21st Century rating system that is responsive to both the views of ratepayers and the needs of our public finances in paying for our public services. The consultation is now open.”
‘A Rates Rethink: Spurring Economic Growth’
On 22 November Finance Minister Máirtín Ó Muilleoir made a statement to the Assembly announcing a shake-up of the rates system.
‘A Rates Rethink: Spurring Economic Growth’ included a £22m investment in retail and hospitality businesses, the introduction of two pilot Business Empowerment Zones and removal of the domestic rates cap. These changes follow on from the Business Rates Review carried out by the Department in the early part of 2016.
Rates Liability for Domestic Rental Properties
In March this year the Department launched a public consultation exercise in relation to rates liability in the domestic rental sector.
The Department intends to use the consultation process to establish the case for change in this policy area with the aim of ensuring that arrangements:
- are fair, not simply to those in the sectors concerned but to the wider body of ratepayers;
- are workable and affordable (and that any allowances that are provided are no more and no less than they need to be);
- support the effective and efficient collection of rates;
- ensure clarity of responsibilities for rate liability for both landlords and tenants; and
- are consistent, so that one type of landlord is not placed at a disadvantage compared to another type of landlord.
The consultation exercise ran for an 8 week period and closed on 3 June 2016.
Responses to the consultation exercise and an accompanying consultation report have now been made available on the Rating Policy Division’s website. The results of the consultation exercise have now been analysed and presented to the Minister, in order to information policy decisions in this area.
Future of Small Business Rate Relief Scheme
On 21 March, the Minister of Finance and Personnel along with his Department for Social Development counterpart launched a discussion paper on the future of small business rate relief scheme.
The Departments are seeking views on alternatives to small business rate relief, with a particular focus on town centres. The discussion period will end on 13 May 2016.
Review of Non-Domestic Rating System
Rate relief for sports clubs
On 19 January 2016 Finance Minister Mervyn Storey introduced legislation in the Assembly to allow enhanced rate relief to be provided to struggling community amateur sports clubs.
This Bill permits the Department to put community sports on the same footing as community halls by granting 100% rate relief to unlicensed club premises and associated sporting facilities.
The Rates (Amendment) Bill passed its Final Stage in the Assembly on 2 February 2016 and gained Royal Assent on 28 February 2016.
On 2 March the Department launched a targeted consultation document in relation to the proposed use of the enabling power.
The consultation will run until 9 May 2016.
Rate Rebate Replacement Scheme
Now that a settlement has been reached on Welfare Reform, the Executive agreed (on the 25th February 2016) to consequential adjustments to rate support arrangements for low income households of working age.
DFP has carefully developed a new simpler rate rebate policy which adopts a new assessment mechanism for working age claimants. This is in order to align with the Executive’s plans for the introduction of Universal Credit (UC) in Northern Ireland.
The agreement allows DFP to bring forward the necessary legislation to allow the new assessment mechanism to be piloted at the same time as the UC ‘test phase’ in Northern Ireland, for claimants who also need help in paying their rates. This is planned to begin in the Autumn of 2016.
Adjustments can be made, if required, following the outcomes of that pilot process. In the meantime, there is to be no change to the current arrangements and rates support will continue to be delivered through the Housing Benefit system - except, of course, for those households within the chosen pilot area, who will be given plenty of advance notice about what is happening.
Changes to the assessment mechanism are necessary because the current support scheme for those on low incomes will quickly become redundant during the transition to Universal Credit for new claimants and as the legacy social security benefits are migrated across to UC.
The proposed policy solution for the new DFP Rate Rebate (RR) Replacement scheme will rely on UC award notice information with an earnings disregard and 10% taper, as was consulted on previously.
The Executive has agreed to fully fund the rates support up to and including the next financial year 2016/17, despite a funding shortfall between what the scheme actually costs and the funding Northern Ireland receives for it, as part of its Barnett settlement (NI’s share of national taxation). Decisions on future funding levels will need to be taken in due course by the new incoming administration.
Regional Rates Order 2016
On 22 February the Assembly approved the Regional Rates Order 2016, which fixes the amounts of the regional domestic and non-domestic poundage used for the next financial year. For 2016-17, both the domestic and non-domestic regional rate in Northern Ireland will be uplifted in line with inflation by 1.7%.
The Assembly also agreed to continue the Empty Shops Rates Concession and the Rural ATMs exemption for a further year.
District Rate Convergence Scheme - publication of subsidies
28 January 2015 - The Department of Finance and Personnel has now published details of the subsidy for ratepayers who were facing increased rate bills because of the amalgamation of council areas and redrawing of boundaries.
The discount will be automatically applied to rate bills and no action is needed from ratepayers who are eligible for the subsidy. It will address only the increase in rate bills which is a direct result of the creation of the new larger councils.
The scheme will provide an 80 per cent subsidy next year to reduce the district rate element of the bill in those areas that would have increased as a result of the convergence of council areas - in other words, the regrouping of ratepayers within the new structure. This subsidy will be phased out in stages over the next four years. It will have no direct bearing on the financing of the new councils who will still act independently next month in setting the district rates to cover their spending plans for next year.
Evaluation of the Small Business Rate Relief Scheme
This evaluation was undertaken by the Northern Ireland Centre for Economic Policy (NICEP) at the University of Ulster, informed by a public consultation between April and July 2014. A consultation paper, the responses to the consultation and a factual consultation report have been published
4 December 2014: NICEP has completed the evaluation and their full evaluation report has now been published.
The Executive's draft Budget proposals makes provision of £20m for continuation of the scheme next financial year. A final decision will be made following the public consultation.
Details of the District Rates Convergence Scheme published
20 November 2014 - The Finance Minister Simon Hamilton MLA has now decided upon the final details of the scheme to help manage the issue of rates convergence. The scheme will come into effect on 1 April 2015 to coincide with the creation of the new larger councils
The scheme is an outworking of the Executive’s decision to provide up to £30m of support for the effects of District Rate Convergence on ratepayers (ie the result of district councils coming together or boundary changes). The subsidy will be applied automatically by LPS and therefore ratepayers do not need to claim this support.
It will see the effects of rates convergence phased in over the full council term with an 80 per cent subsidy applied next year (2015/16). This will remove 80 per cent of the amount which has been identified as the 'convergence' effect. That support will then be gradually phased out over the 4 year term and will be applied at increments of 60 per cent, 40 per cent, and 20 per cent over the remaining years of the scheme. There will be no threshold applied to the scheme and the only exclusions applied will be in respect of public sector bodies and those properties which are already converged through social sector standardisation.
This serves to effectively neutralise any sudden and significant increases as a result of the specific effects of district rate convergence. This will not interfere with the District Rates that are set independently by the new Councils next year, as these decisions are based on a range of other factors under the control of local government and outside the scope of this ratepayer support scheme. Councils, therefore, have an equally important part to play in managing their finances and acting responsibly when striking their District Rates over the course of the scheme.
The support scheme will also avoid any ‘netting off’ due to the non-domestic revaluation. It will operate by discounting the District Rate to the same extent in each of the affected areas and therefore those business ratepayers who stand to benefit from the revaluation will get their full entitlement from next April.
The model selected for the final scheme was the one broadly supported during the consultation exercise and the funding available has been utilised so as to reflect that preference, particularly given the unprecedented pressure on public finances over the next few years.
The estimated cost does, however, comes very close to the maximum funding of £30m made available by the Executive. As a result the Department will be monitoring actual spend carefully for the mid-term review which is planned in advance of the 2017/18 rating year, to establish if any adjustment to the scheme will be required in the latter years. The Department is already required to do this under statute in line with the provisions of the Local Government Finance Act (Northern Ireland) 2014.
The next stage is the calculation of the various District Rate Discounts that will be applied to rate bills in each of the affected areas over the life of the scheme, to implement the above policy. These will be published on this website in the coming weeks.
De-Rating of commercial window displays
November 2014 - This concerns a relatively minor policy proposal being considered by DFP and currently subject to a targeted consultation over the coming weeks. It would involve a concession being made so that window space in empty shops can be used for the display of goods without incurring a full occupied rate.
A short policy paper has been circulated around interested parties seeking views. This supplements a wider consultation undertaken by DFP in 2012, to inform the current policy which disregards the non-commercial use of window displays in empty shops in assessing liability for rates.
Non Domestic Rates Revaluation 2015 – publication of draft values
13th November 2014 - Land & Property Services (LPS) has completed the revaluation of all non-domestic properties in Northern Ireland for rates purposes. A Schedule of Draft Rateable Values is now available to view. These values will be used to assess rate bills from April 2015 onwards.
Currently non domestic (business) rate bills are based on 2001 rental values. From April 2015 they will be based on 2013 rental values. This will rebalance business rates because the proportion of the rate burden (what each ratepayer pays) will be shared out relative to the 2013 rental value of their property. The new values are informed by rents and trading information provided by ratepayers.
Further details of the Revaluations and the schedule of draft values can be accessed on the Reval 2015 NI website.