Deprived area

Tax breaks intended to help inner cities will benefit upmarket retail and office developments

By Jason Niss
Thursday 21 November 2013 05:38
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It may look like the most fashionable store in the north of England. But according to the Inland Revenue, Harvey Nichols is "disadvantaged".

The chic shop, along with some of the most sought-after office space in the UK, three of the country's largest shopping centres and the Revenue's own new offices in Birmingham, have all been excused stamp duty as part of a measure in last week's Budget designed to help deprived parts of Britain.

The Revenue has drawn up a list of hundreds of "enterprise areas" (though they were known as "disadvantaged areas" until last Wednesday) where no stamp duty is payable on commercial property. This in effect adds 4 per cent to the value of the property overnight.

But something's gone wrong. "There's a fault in the way the Revenue have identified the areas," says Kevin Griffin of accountants Ernst & Young. "They are looking at the average income of residents in council wards. Many of these areas have spare land that has attracted developers, and it is inevitable that they include prime commercial sites."

Canary Wharf is in an "enterprise area", as are three of the UK's largest shopping centres, Meadowhall near Sheffield, Merry Hill near Birmingham and the Trafford Centre in Manchester. Their owners, British Land, Chelsfield and Peel Holdings, have effectively received a £100m windfall from the Government.

The Revenue also benefits from its own change. Its new office block in Birmingham is in an enterprise area, as is Blackpool Pleasure Beach, Manchester United's Old Trafford ground and the Liver Building in Liverpool.

But most curious are Manchester and Leeds city centres. Part of central Manchester, the North's leading commercial centre, where offices can cost around £25 per square foot to rent, is in an enterprise area, as is almost all of the centre of Leeds.

James Poskitt, a director of surveyors DTZ Debenham Tie Leung, said: "This is the strongest performing commercial centre this side of the Pennines. And it just became 4 per cent more attractive."

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