Every fifth small or medium size business is threatened by serious cut backs or even closures according to the Federation of the Small Business (FSB). The risk will come after April 1st when the new regulation of business rates will apply.
55 % of the asked owners think that the new rates will force them to reduce, postponed or even cancel investments and 34% believes that will force them to increase prices. Another 44% are expecting their bills to rise with more than £1,000 a year and 54% are ready to lose most of their profits.
The FSB’s research suggested more than a third (36%) of small firms expect to see their rates increase, with 44% expecting bills to eventually rise by more than £1,000 a year, and one in five (21%) expecting to see their bill hiked by more than 40%.
The revaluation of the business rates happens in every five years and reflects price rises and the falls of the property market. there hasn’t been a change for the last 7 years and the alteration, together with increasing cost of labour and, most likely, new government taxes have become serious concern for thousands small businesses across UK. “You could see a whole series of towns and villages losing the heart of their business communities” worries Craig Beaumont, a spokesperson from the FSB. According to him it is “fast becoming untenable to run a small business in some areas of the country”. The rise of the business rates is expected to hit hardest villages and towns just outside of London, which in the last few years experienced booming success on property and business market. Shops in places like Southwold and Suffolk could have an average increase of 177% fearing the members of FSB. Other places like Islington and Hackney could expect rise of 46%. London area stays with relatively low rise of the rates with an average of 11% according to the experts.
The Treasury department defended the idea of changing the business rates pointing that assessable value of less than £12,000 will be entirely free from the tax which add up to over 600.000 small businesses. Some of the industries are also in support of the reform. Helen Dickinson, chief Executive of the British Retail Consortium, which represents up to 80% of the UK retail trade thinks that “The business rates system is no longer fit for purpose in the 21st century … Reform of the business rates system must address head on the need to reduce the burden of property taxes which are higher than in any other developed country.”
According to her, the impact of the business change rates will affect the state of Treasury bringing in the next 3 years over £2 billion only from retailers. The new business rates are expected to bring £29 billion in the 2016/2017 financial year.