| Published | 4 September 2008 |
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The Government today addressed business industry concerns that the prospect of an increase in business rates acts as a disincentive for companies to invest in microgeneration.
Local Government Minister, John Healey announced steps to provide clarity, reassurance and certainty to businesses working to reduce their carbon footprint so they are protected from an immediate and automatic revaluation of the business rates they pay.
As part of the Government's drive to cut carbon emissions and tackle climate change, amendments to legislation published today will prevent any investment by a company in energy microgeneration - such as solar panels, wind turbines or ground source heat pumps - from triggering an immediate revaluation of their premises because of this action, and therefore possibly their business rate bills.
Under current procedures, any material improvement to a property can automatically trigger a reassessment of its rateable value. Under these new plans, the valuation assessment will be delayed until the first general revaluation after the technology is installed.
Contrary to some perceptions, the installation of microgeneration equipment may not automatically lead to an increase in the rateable value of a property and therefore results in an increase in business rates bills.
Today's announcement will help provide assurance to greener businesses, and dispel concerns that a perceived increase in business rates and the cash investment in the technology will happen at the same time.
John Healey said:
"We all need to do our bit to reduce our carbon footprints. Small scale energy generation, like installing solar water heating or a biomass boiler, can be a cost-effective way to do this. By 2020 a significant amount of the renewable heat generated in the UK could come from small scale installations".
1. Currently, if an occupier of a property makes any improvements to their business property at any time, the Valuation Officer is duty bound to re-assess the value of the property, which can happen at any time between 5-yearly revaluations.
2. Changes to business rates legislation will come into force from 1 October, 2008.
3. The next revaluation of business properties, in which businesses are assessed for their liability for business rates, is scheduled to take effect on 1 April 2010.
4. Companies can make money from investment in the technology, both by selling any surplus electricity generated back to electricity companies and by obtaining a Renewables Obligation Certificate, which can be sold to energy suppliers, who need to acquire them. No tax is paid on income from the sale of surplus electricity and Renewables Obligation Certificates, and there is a reduced rate of VAT on certified microgeneration installations.
5. Funding for clean energy technologies, investments and enterprises will rise to over £400 million over the next three years. Interest-free loans of between £5,000 and £100,000 to buy more energy efficient equipment are available to small and medium size enterprises through the Carbon Trust.
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