London firms face high bills following rate changes
Thousands of firms in London will soon face larger bills once property revaluations alter business rates.
In a change that marks a significant point in the redistribution of the levy, a Government analysis has revealed what retailers in the capital can expect.
Businesses in the capital will see business rates jump by an average of 14%, although some areas will be hit significantly harder.
The revaluation of properties is long overdue, having been previously due in the run-up to the 2015 general election, with some areas set to see rates more than double – such as in Shoreditch for example.
Forecasters have also warned that other rapidly redeveloping areas will also be hit – the levy for retailers is expected to rise by 120% in Brixton.
The new business rates come into effect from April, and will be calculated based on 2015 property rental values, rather than the outdated 2008 figures from before the recession.
Although the changes will be revenue neutral and will take into account regional and sector differences, the alteration is still expected to hit businesses hard.
After rent and salaries, business rates are often the next highest outgoing for businesses, which means a dramatic rise could put some at risk.
Although alternative finance options do exist to aid firms facing difficulty, exceptionally high rates will likely make it unsustainable for firms to stay in the same locations.
This could mean many businesses either relocate or are left in need of financial support – in the case of the former though, such moves could damage existing business relationships and may carry long term implications.
Firms facing difficulty can seek help and advice from various sources across the capital, including insolvency practitioners and other financial institutions.
Those operating on tight margins are likely to be the ones hit hardest by rate increases although other regions of the UK might benefit as a result.
Government data suggests that some areas, particularly in the North of England, are seeing businesses pay more than they should be, although transitional relief is likely to delay the situation, just as it will for firms facing large rate increases too.
By Phil Smith
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