Business Rates Rise a Serious Threat
This has to be the reddest Conservative government ever. First the hike in the minimum wage, planned to continue increasing to 2020. Then the auto-enrolment pension contributions, which are due to increase to 3% in 2019. Now the Daddy of them all – the planned changes to business rates.
Just to be clear business rates are a tax on places of work. The tax is calculated on the rental value of the property as estimated by the Valuation Office Agency (VOA). The total rates bill will rise by more than 6% in April. There will be more losers than winners. Due to a two-year timing drag, this year’s overhaul reflects the property market as at 2015. The biggest negative impact is set be felt in affluent market towns and in London. Some individual small businesses will experience significant increases in business rates. This will undoubtedly mean the difference between survival and extinction for many.
For small businesses with one site, the government has doubled the level of relief it provides exempting properties with a rateable value of less than £12,000 and offering tapered relief up to the £15,000 level. The Treasury has put in a phasing to prevent property occupiers being hit with big increases overnight. The cap for properties valued up to £20,000 is at 5%. However, for properties valued at £20,000 to £100,000 the rise is capped at 12.5% and for those at more than £100,000 the cap is 42% - almost meaningless. Properties enjoying a reduction in business rates will not feel the benefit straightaway.
What can be done? Very little it seems. Specific information about rates relief can be found on www.gov.uk. Cllick on to Small Business Rates Relief. Ratepayers can appeal against their bills, although there is a backlog of around 280,000 cases and the VOA resolved only 64,000 last year. Time to lobby MPs as assertively and often as possible. The planned business rates rise poses a serious threat to small independent retailers.
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