UK firms to face rising costs burden
Businesses based in England and Wales are set to face a £4.5 billion tax increase over the next five years, according to analysis from CVS.
The business rates advisory firm studied government data and found that new rateable values for rates on commercial property will mean a £909.9 million annual tax increase for offices.
The increases only came into effect in April this year, while the analysis didn’t take into account the full impacts of the new ‘staircase tax’ that relates to some business property.
According to the new ruling, a business with multiple offices in a building split by a staircase or corridor that is shared with other firms will be treated separately for tax purposes.
As a result, some firms will need to pay business rates for the first time while others will see their bills increase – potentially placing more pressure on the finances of the nation’s small businesses.
A court ruling found that the taxes can be backdated as long as they are issued prior to March 2018, while the Federation of Small Businesses has branded it “ridiculous”.
According to the analysis from CVS, nearly 370,000 offices were liable for business rates in the financial year to the end of March 2017, with a combined rateable value of £12.93 billion.
This rose to £14.5 billion on 1 April – a jump of 12.3% – following the revaluation of rates earlier this year, while CVS added offices will face a total property tax bill of £36.8 billion across the next five years.
CVS have called on the government to limit the staircase tax through fears that it will increase the liabilities for firms already facing large tax burdens.
As well as forcing some businesses from their existing properties in instances where rates are too high to afford, other firms could be left facing insolvency if they are unable to find alternative solutions.
A number of software issues at local authorities have also been blamed for the slow rate at which emergency government funding – set aside to aid those worst hit by rate increases – is being distributed.
This has piled the pressure onto small firms and it is thought that there are thousands of companies that are still waiting for rates relief.
A number of alternative finance options are available to help those in difficulty, but it does not provide a long-term solution.
In such instances, assessing and restructuring a business, or moving location, may be the best options in the long term.
By Phil Smith