“Staircase Tax” update: Get ready to claim for any overpaid rates

  • Various scenes in an office block showing people and staircases 

Thousands of business owners are now able to claim substantial rate rebates from their local authorities. Surveyor Andrew Smith looks at the reversal of the so-called Staircase Tax

Despite its name, the so-called ‘staircase tax’ is not, in fact, a tax on staircases. It is a change to the business rates system, arising from a Supreme Court judgement, Woolway (VO) v Mazars (2015 UK SC53).

For well over half a century, businesses occupying more than one floor of a building were able to merge their occupied space into a single assessment and receive just one rates bill. 
Then, in July 2015, the Supreme Court passed a judgement overturning the fundamental way in which commercial units were assessed. It ruled that, in many cases, floors within the same building were no longer counted as a single property for rating purposes. Businesses in shared-occupancy buildings would get a separate rates bill for every floor they occupied if their space was only accessible by a communal staircase.

The judgement affected the way the Valuation Office Agency assessed properties. Businesses up and down the country started getting unwelcome backdated demand notices, with some facing higher rate bills due to the loss of small business rate relief.

Dubbed the ‘staircase tax’, the judgement was widely condemned and then Chancellor of the Exchequer, Philip Hammond, faced mounting pressure to scrap what was seen by many as a sudden and unfair tax hike.  Following a high-profile campaign by the Federation of Small Businesses (FSB), the Chancellor used the Autumn Budget in 2017 to call time on the unpopular levy.

Fast-forward to the present day, and the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill was presented to Parliament on 28 March and passed on 1st November 2018. 

The provisions of Clause 1 of the Bill mean firms will be able to choose to have their rates recalculated under the old single bill system and any savings due backdated.

The Bill will allow a common-sense approach to valuation to finally prevail, and allow separate units occupied by the same occupier to be considered a single unit, even where they are only accessible by a communal area. 

If you think this will affect you, stay vigilant for any new deadlines taking effect and act quickly to get a refund of overpaid rates.  We’re very happy to answer any questions you might have about the new legislation.