London rate increase could force firms out of capital
Rising business rates could force small companies out of London, according to the Federation of Small Businesses.
It is claimed that microbusinesses – those with less than 10 employees – will be paying rates of £17,000 annually when the changes come into force in April.
Rates were the biggest single concern among businesses in the city of London, with fears surrounding the economy, Brexit and recruiting the best talent all some way behind.
The vast majority of the capital’s smaller businesses play a hugely influential role in the economy and the FSB has warned they could be at risk.
Sue Terpilowski, the FSB’s chairwoman for London, has even suggested that operating costs are now outweighing the benefits of being situated in the capital.
In instances where it is no longer financially viable to be based in London, firms must either source alternative means of finance or tackle their debts.
A failure to tackle debts could leave a business facing administration, while a company voluntary arrangement could potentially be another option for easing creditor pressures.
The FSB has called for action in the forthcoming budget to tackle an issue that was identified as the biggest issue they face by three quarters of businesses.
Economic uncertainty was only deemed to be an issue by 36% of firms, while one third of businesses reported issues when trying to hire the right staff for roles.
It is feared businesses will either have to relocate, reduce staff numbers, or close altogether when the new rates are introduced.
The Confederation of British Industry and a number of other think tanks have also voiced their concerns in recent weeks.
British Retail Consortium chief executive Helen Dickinson went as far as to say that the “unsustainable” business rates system acts as a “disincentive to innovate”.
A handful of high street retailers in the UK could see their rates rise by up to 150%, which could place incredible pressure on their finances.
By Phil Smith