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London's business rate D-Day draws near

  1. iStock_Anatoleya
    Francois Badenhorst

    Francois Badenhorst Deputy Editor Staff Member

    Posts: 86 Likes: 16
    2 |

    The business rates D-Day for London’s small and independent businesses is now looming large on the horizon. On April 1, the next revaluation of all properties for business rates will take effect.

    The revaluation will push many businesses over the £12,000 100% rate relief threshold. “Some premises will be tipped over that threshold and that means they’re automatically paying £5,000-odd per year as opposed to nothing,” explains Steve Adams, a UKBF member and MD of Business Rate Advisors.

    “That’s quite hard hitting for small, independent business. My advice for these companies is to consider where they’re based or get their lease changed. But, of course, there aren’t many landlords that’ll do that.”

    In some economically depressed areas, businesses will be better off - but in seething property cauldron that is London, the rises will be eye watering. On average, the Capital’s businesses face an 11% rise.

    It’s a bitter pill to swallow considering that the revaluation was due to happen in 2015, but it was delayed specifically while we waited for London’s property bubble to slow down. That, as we all know, hasn’t happened.

    “The trouble is people look at their valuation and say ‘oh it’s very high, can we reduce it?’ But it’s not that simple,” says Adams. “If you appeal it, the valuation can go up as well as down.”

    The Government is also reforming the business rates appeal process. As part of the reform, the Valuation Tribunal for England (VTE) can only order a change to the rateable value of a property if the valuation is "outside the bounds of reasonable professional judgement". The margin of error, says Adams, must be at least 15% for them to even “entertain an appeal”.

    Businesses in the London borough of Islington have now launched a petition demanding the government freeze the revaluation until after Brexit. This, the petition says, will “provide protection for businesses that will be impacted by the uncertainty”.

    Islington will be particularly badly affected by the rise. The Government’s increase in rateable values for business premises in Islington is the third highest in England at approximately 45%.

    The petition is calling for an extension of transitional reliefs for businesses affected by higher business rates and an “increase in the threshold for Small Business Rate Relief in inner London, funded by national Government”.

    The Chancellor Philip Hammond capped annual rates increases have been at 42%, but this is significantly higher than the 12.5% cap during the last revaluation in 2008. Critics have labelled this as “woefully inadequate”.

    “Some people are downgrading and moving to a smaller premises,” says Adams. “Generally speaking, the rises are astronomical. It’s hard to believe. There was one case I saw where it literally doubled. The company were paying £40,000 and they will now be paying £80,000.”

    According to Adams, the increases are worsened by trigger happy councils that pass cases to bailiffs too soon. “Once the bailiffs get involved,” says Adams, “it quickly spirals out of control. I can’t imagine why anyone would want to set up a small business in London. I don’t know how you can make any money out of it. People enter these long leases and they don’t even consider whether they can afford these rates. That’s what kills them. It’s not even the rent, it’s the rates.”

  2. Karimbo

    Karimbo UKBF Ace Free Member

    Posts: 1,576 Likes: 155
    In London even a broom cupboard costs £1000 a month. I tried very hard to find a usable office for <£1000 a month and I struggled.
    Last edited: Feb 8, 2017
    Posted: Feb 8, 2017 By: Karimbo Member since: Nov 5, 2011
    ChrisGoodfellow likes this.
  3. RaRshop

    RaRshop UKBF Newcomer Free Member

    Posts: 0 Likes: 0
    Attempts to abolish business rates in the past has failed because the government says it will lose revenue. The answer is simple - make up the difference in VAT. Foreign imports will then incur the same expense as UK companies, leveling the playing field. Future economic growth depends upon it. Take action, petition parliament:
    Posted: Feb 16, 2017 By: RaRshop Member since: Feb 28, 2014