The topic of business rates appears to stage a constant battle between those who pay them and the Government, which is in receipt of them. As the Spring Budget looms into view, is there likely to be any reprieve for hard pressed business owners?
Ringing the changes
From 1 April 2017, business rates in England and Wales are being updated. Businesses that occupy property with a rateable value of £12,000 or less will pay no rates – but from just £15,000 you are liable for the full 100% rate. So, a £3,000 difference in rateable value could mean the difference between paying tapered rates or the full whack.
Not only are the rates themselves under review, but there was also concern around a clause in the guidance notes surrounding outlined plans for the reforms, making it harder for businesses to appeal against their rates bill.
Criticism has been fought off by the Treasury, which is currently defending these decisions. It replied that rateable values have not been revised in more than seven years and are therefore, overdue. In addition, for three in four businesses, there will be no increase in their bills – but that may be one too many according to the business community’s response.
True, some businesses are expecting rate falls but around a third are expecting increases. Those in the South East of England are most at risk, with some businesses expecting increases of around 40%.
Research from the Federation of Small Businesses has revealed that more than a third of small firms expect their rates to increase, 44% expect their rates to rise by more than £1,000 per year and one fifth expect an increase of more than 40%.
The hospitality industry, specifically the pub and restaurant trade, was featured in the press recently to ask for more transitional relief as part of the Chancellor’s Budget speech next week. This is because, on average, pubs will see a 15% increase in their rates and restaurants a 23% increase across the country. This is seen as a major threat to the overall positive growth to the UK economy.
There seems to be little doubt from the business community that rates overall reform is needed. There is consternation in some quarters that physical retailers may pay more than digital retailers. Arguably, business rates are based on a pre-digital age and need to step up and into the modern world.
For those businesses suffering an increase in rates, can they pass the additional costs on to their customers? They can but it is a price sensitive market place we are living in. Hopefully, the Government will finally find some common ground with rate payers and work together with businesses to create a fairer system. We will wait and see what is delivered on the day.
In the meantime, if you would like some advice on issues affecting your business, then why not get in touch with Wilkins Kennedy to see how we can help.