WeWork Receiving Tax Bonus Reserved For UK’s Small Businesses
The coworking firm estimates it has received about $2.4 million in refunds on 100 million pounds of property taxes since starting its operations in the UK. Due to changes to the British tax system, the rebate is expected to rise. WeWork pays a flat rate that includes upfront-tax payments, which means it gets a tax break.
WeWork is the largest private-sector occupier of office space in London, so its use of small-business commercial property tax breaks is frustrating to some.
“I can’t believe that whoever dreamed up the small-business rates relief was remotely thinking about the serviced office sector,” said Steve Hile, a partner at property consultant Gerald Eve. “There is a huge amount being paid out that really should not be paid out because it is not going where it should have gone.”
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The tax arrangement works by allowing WeWork to divide its properties into dozens of individual areas. Each space, known as hereditaments, are then separately assessed for tax purposes. This allows the company to claim the taxes on any area that is small enough to be eligible for relief.
Many flexible operators use this practice, but WeWork builds out smaller parcels in its spaces. For example, a single WeWork site at 1 Fore Street in London that spreads over eight floors has about 800 separate hereditaments.
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