Which regions are worst affected by business rate increases?

Milton Keynes and Reading are set to be two of the hardest hit areas as a result of increases in business rates for small firms.

An analysis from Simply Business, using further research from JLL on business rates, revealed the regions where businesses could be worst affected.

The rate changes were applicable from the start of April and are determined by property value – the latest valuation was due in 2015, but was delayed until this year due to the last General Election.

Given that rates are calculated around the open market rental values of a region, areas that are deemed to be ‘on the up’ can face larger increases.

Business rates provide around £25 billion annually for the exchequer, and calls for reform – with rates to be based on profits or business turnover – have existed for several years.

Some parts of London have seen rates go up by more than 100%, but according to the research, Reading will be the worst hit location outside of the capital.

Rates there are projected to rise by up to 70%, yet more than a third of firms in the region have a turnover of less than £50,000.

Milton Keynes is facing a similar situation, as business rates are set to go up by 60% while around a third of companies are turning over £50,000 or less.

Croydon and Cambridge which took the next places on the list will face lower rate rises despite having a greater proportion of businesses that are turning over more than the £50,000 threshold.

The proportion of firms earning more than £50,000 was also higher in Reading and Milton Keynes than in some cities expecting to see a decrease in rates – including Birmingham, Liverpool, Leeds and Exeter.

Smaller businesses could struggle to balance all of the costs involved and to ensure a smooth cash flow, placing them at greater risk of insolvency should something go wrong.

However, those fearing for their long-term future could still develop contingency plans in order to have options when they do face difficulties.

By Phil Smith

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