Commercial mortgage holders 'are taxed too highly'

01 April 2011

Written by Simon Whittaker

Commercial mortgage holders are taxed too highly compared with residential homeowners, it has been argued.

In a letter to the Financial Times, Tim Ward explained that he paid significantly more on business rates for a property in Hampshire than householders in expensive parts of London do on council tax.

He stated that he is the managing director of a small business that owns a small retail building in Gosport.

While a person living in Kensington or Chelsea, whose houses could be worth up to £10 million, will never pay more than £2,158.24 a year of council tax, his company has been forced to shell out £11,182.50 per annum on business rates.

"I looked up the definition of the much-used word 'fair': just, unbiased, equitable, legitimate," Mr Ward wrote.

He noted that his firm pays an annual tax of 5.6 per cent of the value of its real estate, while the owner of a £10 million property is charged 0.02 per cent of the capital on their dwelling.

The letter writer argued that business rates for properties worth less than £1 million should be brought in line with council tax on residential abodes.

"Would seem fair to me," he concluded.

One expert that may agree with Mr Ward's argument is chief executive of the British Property Foundation Liz Peace, who recently claimed the rates charged on commercial real estate is stemming business growth.

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