Small businesses voice concerns over rate increases
A number of small businesses and lobby groups have voiced concerned over business rate increases that are due to come into force in April.
They claim that it could push some firms towards bankruptcy, especially those operating on tight margins, and have suggested that the Government should take action in this year’s Budget.
The CBI, the British Chamber of Commerce and the Institute of Directors have all said that action is needed, with the easing of exemption rules put forward as one solution.
Business rates are levied in proportion to rents and are being redistributed in April this year – for the first time since 2010 – to take into account changes to property values.
Financial problems for firms are most likely to occur in locations where property values have risen sharply in the last seven years – rates could rise by more than 40% in these locations.
The impact on businesses is hard to predict, although rate increases may limit a business’ ability to be competitive, which could lead to lost sales as consumers look for alternatives.
As a result, the CBI has called for a “simpler, fairer and more competitive” solution for business rates to ensure they do not act as a barrier to growth or new start-ups.
Firms faced with higher rates could be forced to shift their base of operations to more low-cost areas, or may even face entering administration if debts build up.
There are a range of alternative finance options that can assist businesses that are facing difficulties and in need of refinance as well, if a substitute to administration is sought.
A survey from retail research firm Conlumino has suggested that the UK’s complex business rates system is viewed as a barrier to international retailers.
It is claimed that three-quarters of these retailers are opting to enhance their operations in other locations instead of the UK as a result of property taxes.
However, strong digital infrastructure and labour laws were found to make Britain a popular location for doing business.
By Phil Smith
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