How much could your business save?Find out now!
Or, you can call us on:0800 411 8830

What does the business rate review mean for small businesses?


Small businesses cheered Chancellor George Osborne’s promise to review the business rates system in his autumn statement. But any changes are still some way off and many are wondering if the proposed reforms will go far enough to make a difference.

Currently rates are charged on physical premises including shops, offices, factories and pubs. It is often these high costs that are also behind some of the large number of vacant properties on Britain’s high streets.

The government has, however, recognised there is a problem with the rates system – set to bring in £22.4 billion to government coffers in 2014-15 – as demonstrated by short-term fixes including discounts to retailers, rates caps and rates relief schemes for small businesses.

But more needs to be done, companies say.

”Business rates are one of those costs that can take small or starting businesses by surprise,” says Douglas Haig, managing director of James Douglas Sales & Lettings in Cardiff.

“For the last few years, with pressure on the economy and empty shop fronts and business units, the business rates have been higher than the rents in many places.”

The agent’s sister company Seraph Property Maintenance had been looking for premises to rent for waste management, tool storage and van servicing for the past two years.

“We have negotiated some excellent rents on ideal units but the size means that the rates are simply prohibitive for this expansion.”

So what could – or should – deeper rates reforms look like?

Bryan Johnston, external affairs adviser at the British Retail Consortium (BRC), whose members are hit harder than most businesses by rates because they often need a physical presence on high streets, says rates a big issue for small businesses.

The BRC would like to see businesses whose premises have a rateable value of below £12,000 removed from the system altogether.

The consortium also wants not just the rates themselves but the way they are levied to be re-examined. “It’s not just the cost but the amount of time spent processing them that can amount to hundreds of pounds,” says Johnston.

Ian Baxter, founder of logistics company Baxter Freight, based in Nottingham, received a bill for about £40,000 when the company, now just over a year old and employing more than 70 people, moved into its 7,500 square feet premises last year.

“We were a brand new company. We hadn’t yet sent an invoice. We had no income yet but we had start-up costs and were trying to build a business,” Baxter says.

Having previously run another successful freight business, Baxter wasn’t too fazed by the rates bill, but believes other start-ups must be.

“It has got to be a deterrent to people starting businesses. There ought to be a scheme for genuine new businesses of rebates or giving people more time to pay,” he says.

“It’s correct that when businesses succeed they should contribute through taxation but I see rates as like a poll tax for companies – a tax that doesn’t reflect the recipient’s ability to pay. The rates system needs to be more related to profitability of businesses.”

The government has postponed a revaluation of rateable values from this year to 2017.

Baxter says: “It should be committing to leave the revaluation until there have been genuine reforms of the system to help small businesses and the high street.”

Sam George, managing partner at QualitySolicitors Rubin Lewis O’Brien in Cwmbran in Wales is not hopeful that rates bills will fall across the UK.

“One of the requirements of the review is that it must be fiscally neutral and so the size of business rates bills in England seems unlikely to fall,” says George.

However, devolution of business rates to Wales this year will give the Welsh government control over the charges from April.

“A new system which takes account of economic cycles, such as a sales or profits tax, would perhaps be easier to bear, he added.”

Related Articles

the week's energy news

The Week’s Top Energy News – 02/12/2016

The Christmas season has well and truly begun and, in true business style, you’ll either be incredibly b...

Read More
how to motivate your team

21 easy ways to motivate your team

Being a manager is tough, and understanding how to motivate staff isn’t necessarily straight forward. It...

Read More
small business santa

Could you win our small business Santa competition?

We don’t know about you but we are feeling very Christmassy right now. Carols on the stereo, mince pies for ...

Read More
Excellent, 9.5 / 10

Fixed up in no time!

"I was contacted by Jonathan Burgess after making an inquiry on line, who was very informative in finding me the best deal for my business. There was no pressure selling,only information given to assist me in making an informed decision. There was ample opportunity during the process to question or pull out if need be. Everything was made clear,and would definitely recommend others using the service."

This review was posted by john kril on the 05th of September 2016

Brilliant Service

"I was contacted by Aaron Gallagher after visiting SwitchMyBusiness.com. He was very helpful and knew a lot about the different contracts available but did not push me into an instant decision. Once our Directors had decided on the contract they wanted I called Aaron on his direct line and arranged our new contract. Aaron was at all times friendly and professional, completely different to other companies who contacted me about our renewal who were arrogant and pushy. Would recommend SwitchMyBusiness to anybody who is looking to switch their energy."

This review was posted by Debbie on the 08th of September 2016

First Class Service

"I spoke with Mark Weeks today to get quotes for my business energy and he was extremely helpful. He talked me through the process clearly and also got me better prices than I could have done myself. Comparison sites are just so complicated and he did all the "leg work" for me. Very pleased with his assistance and would recommend SwitchmyBusiness to any of my friends and business acquaintances."

This review was posted by Debbie Andrew on the 08th of September 2016

Excellent

"Jonathan Burgess rang me back straight away and took me through my business switch. Polite thorough and easy to understand. Highly recommend to anyone looking to save money and switch business energy accounts. Thank you."

This review was posted by Suzanne Richmond on the 09th of September 2016

Happy

"Jonathan Burgess did a great job of helping me through switching my business with both gas and electric. He was very thorough ,clear spoken and a pleasure to speak to today. I would recommend anyone to use this service"

This review was posted by Louise holman on the 09th of September 2016