Commercial Property and the "staircase tax" - what's going on and what's the impact on the commercial property market?

What is the "Staircase tax"?

It was decided by the Supreme Court that businesses in a multi-tenant office building but operating from different rooms or floors would have to pay rates separately on each area divided by a corridor or a communal staircase.

For example, a tenant can let two offices in the same building, only separated by a corridor or staircase, and yet have those offices treated as separate premises for tax purposes.

What is the impact?

The decision was passed in 2015 and the tax backdated to then - firms that do not pay face prosecution. As many as 30,000 small business are (knowingly or unknowingly) facing bills of up to £15,000.

Plus, many smaller businesses will have lost or face losing their 100% small business rates relief, since it is only open to companies that have "one" property.

The impact could be devastating for small businesses who are just getting by and could result in bankruptcy. As such, more and more small businesses are being forced to consider downsizing and/or making stuff redundant as a result.

What can you do?

Unfortunately the back-dating of the tax means that it has already been incurred and is due. The only hope in respect of this incurred tax is retrospective action by the Chancellor in the Autumn statement.

Moving forwards, companies can review their occupational documents, seek advice, and see whether they are able to 'break' or surrender a lease, sub-let the space or share the space with others, which might assist in mitigating losses.

Before taking action, businesses should consider the potential longer term ramifications of changing their occupational arrangements (and the rights that other might accrue via sharing space) and seek advice where necessary.


The staircase tax (coupled with the April changes to business rates), means that small businesses have severely suffered and are facing punitive taxation made worse by the overriding uncertainty in the market with the on-going Brexit negotiations.

For businesses in leases, a careful review of the lease should be carried out to see what options are available (such as break, surrender, sub-let or share) that might mitigate the increased rates.

For businesses with licences, again, a careful review should be taken of the occupational document and consider alternative approaches to their occupation which might mitigate the loss.

For either, approaching the landlord or managing agent to discuss variations to existing occupational documents is also an option.


Should you have any questions or wish to discuss any of the issues raised above then please contact Paul Olliff at

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