Business rate rises put pressure on small firms
The UK’s small businesses are set to face rising business rates in the forthcoming financial year, putting a great deal of pressure on their finances.
From April 1, business rates will jump by 3.5% for the next 12 months, resulting in a total tax bill of £24.8 billion.
The National Living Wage for the over 25s also increased at the start of April by 33 pence per hour, leaving businesses to foot the additional costs.
According to Mike Cherry, the National Chairman of the Federation of Small Businesses, the moves threaten high streets across the UK as he claims the tax hits firms before they made turnover or profit.
He added that the business rates outpace inflation by a significant margin and that a number of firms that had previously enjoyed caps on business rates will now see them soar.
Following the revaluation of the rates system in 2017, a number of firms are yet to receive financial support from a £300 million fund launched to provide a level of protection.
More frequent revaluations could aid businesses but the FSB has aired fears that it might also increase the administrative burden that they face.
Given that small firms provide employment at close to record levels, the FSB has called for more government support for managing the costs that result from keeping people in the workplace.
For four in ten small firms, labour costs are a major part of their operational costs and this can limit their ability to expand or to launch new products and services.
The key for directors and company owners is to act quickly as this increases the number of potential insolvency and restructuring solutions that could be available.
By Phil Smith