The Business Rate Supplements Act 2009 provides levying authorities with a discretionary power to impose a business rate supplement (BRS) of up to two pence per pound of rateable value to fund certain projects that promote local economic development.
Regulations have recently been laid before Parliament (coming into force on 15 October 2009) that will enable a BRS to be imposed on business premises with a rateable value exceeding £50,000. Levying authorities will be able to impose a BRS with effect from the financial year commencing 1 April 2010.
The following authorities have the power to levy a BRS (levying authorities). In England, county councils, district councils (in areas where there is no county council) and the Greater London Authority (GLA) and, in Wales, county councils and county borough councils.
A levying authority may impose a BRS to raise funds for projects that will promote economic development in its area. Funds raised by a BRS can only be used on the project to which it relates and only on expenditure that the levying authority would not otherwise have incurred (subject to transitional provisions where a BRS is levied on or before 1 April 2011).
A BRS cannot be used to fund services which the levying authority is already obliged to provide. At present the following services cannot be funded by a BRS: housing, social services, education, services for children, health services and services that the levying authority provides in the discharge of functions imposed by or under the Planning Acts.
Before imposing a BRS a levying authority must issue a prospectus and follow a consultation process. In limited circumstances, a ballot may also be necessary of, amongst others, potential BRS payers.
A levying authority has discretion to introduce such reliefs in respect of a BRS as it thinks appropriate. The rules for the application of the relief must be set out in the final prospectus.
Both business occupiers and owners of empty business premises are liable to pay a BRS, but only where the rateable value of the premises exceeds £50,000 (note that a new rating list is to come into force on 1 April 2010 following the latest five-yearly review).
Effectively, a levying authority has discretion to exempt an owner (the person legally entitled to possession) of empty business premises from paying a BRS. Charities and amateur sports clubs are not liable to pay a BRS in respect of empty properties owned by them.
On 30 July 2009 the GLA published an initial prospectus for a BRS of two pence per pound of rateable value for business premises with a rateable value of more than £50,000, to be introduced from 1 April 2010, to raise funds for the Crossrail project.