City hit by hidden extras

It is not just huge increases in rateable value that occupiers in London need to be worried about. From next year, a 2p levy will be added to the uniform business rate (UBR) - the multiplier set by the government and applied to the rateable value of each building to determine its final business rate liability.

The levy has been applied under the business rate supplement, which has been introduced nationally to give local authorities the power to raise cash for economic development. What this means for London is that, from 2010, occupiers will pay an extra 2p on the UBR of 48.1p to help Crossrail fund £3.5 billion in borrowing. It will be applied to occupiers of properties with a rateable value of more than £50,000.

There is the argument that the government does not need to charge the full 2p supplement rate for Crossrail because its calculations are several years old and as a result we are going to see these huge increases in rateable value. Because you would have more occupiers above the £50,000 threshold, the government could probably afford to decrease the levy to 1.5p.

For occupiers in the City, there is more bad news in the form of a surcharge of 0.4p on the UBR, introduced in 2004 by the City of London Corporation. In addition occupiers which do not qualify for small business rate relief - pay another 0.4p.

In total, that means an additional 2.8p on the UBR for City occupiers and, if the building is vacant, landlords. The UBR will be announced alongside the valuation list in the autumn.