Ben Woodthorpe, Partner at ReSolve talks about the likely impact of the April-implemented business rate change.
With all the noise in the press about the potential impact on businesses, subsequent backtracking from the Communities secretary Sajid Javid, and now a furore about Amazon paying less whilst smaller business pay more, I thought it worthwhile offering a quick perspective reflective of our clients’ business in and around London.
- In my experience business rates are often the third biggest outlay after rent and staff costs, so increases in business rates will mean additional and unwanted financial pressures to many businesses
- The ability to appeal against incorrect or unfair valuations has been significantly impaired meaning smaller businesses may suffer from unfair revaluations for around five years, until the next revaluation takes effect
- Whilst the aim is to marry overall levels of business rates rises to that of inflation, a revaluation weighting is implemented nationally. London and the South East may see average rates rises of 11 per cent whereas the North are likely to see large drops.
- Importantly, national infrastructures such as water, transport and telecommunications networks, could see an average rates rise of 28 per cent
- It looks like the heaviest hit clients are in London – certain locations in central and west London are seeing very large hikes – and are likely to be companies in the retail, property and restaurant spaces
- We now have a general election looming. This will only serve to increase uncertainty in the economy and may exacerbate issues caused by a change in business rates.
If you or your clients are in those sectors and geography, it would be wise to run an impact assessment if one has not already begun.
For many of our clients we are running a quick business rates health check to look at the likely impact of the rises as we want to ensure they are able to adapt their cash and sustainability levels quickly. Call us on 020 7702 9775 or email firstname.lastname@example.org if you’d like any more information on this.