In April, over 56,000 small businesses were faced with a steep rise in business rates. It will be the biggest rise in business rates in six years and could potentially cripple struggling businesses across the UK. Many fear that this 3.8% rise will be a ‘tipping point’ for UK business.
Here at Roger Hannah & Co, we help reduce business rates, which makes this incoming rise a key interest moving forward. The effect this rise will have on businesses will be huge, especially in less affluent areas and for smaller business.
Why WAS There a Rise?
Every year, the business rates multiplier rises with the Consumer Price Index. As such, in September the CPI figure was 3.8% and this has lead to the increase in business rates bills for the new financial year.
Concerns for Local Business
The rise in business rates has resulted in a number of worries for the average High Street shop – especially as it is expected to amount to an overall £1bn rise in business rates. Profits are expected to fall as a result of this.
In particular, the threat to local pubs has also been raised. A staggering twenty-one pubs close per week in the UK, attributed to issues such as the 2008 recession and the smoking ban, and this is a number which is feared will rise alongside the growing business rates. The April increase could see some pubs pay an additional 300% – on average around £1,500 more – an eye-watering rate which could see many close their doors.
An Unfair Rise?
In the face of such steep rises, many are calling the impending business rates unfair for the average business and even a death toll for many.
Tax rates based on property value rather than their turnover or business profit, for many, is overwhelmingly unfair. A call for reform on how business rates are calculated has been raised as a result of these concerns. Whether this will happen remains unseen. But, it will undoubtedly not occur before the April rise in business rates.
The rise in business rates could not only affect current business owners but investors and development plans as a whole. There is expected to be a 55% rise in reduction, postponement and altogether cancelling of investments ahead of the business rates rise.
With many businesses considering closing their doors even before this tax hike, there is a fear that commercial property investment will falter alongside this. Especially in rural areas or cities with rising business areas, as property value in the area may have risen significantly. For this reason, such areas may become undesirable for investment despite rising affluence.
Overall, the change in business rates will affect business up and down the country, which, if it goes through unchanged, could see a drastic change of UK business as it stands today.
Our team of specialist business rate experts can help you to navigate the impending rise in April. For more information about the process, simply get in touch using the contact form or call our team on 0161 817 3398.