Business Rates – A Financial Time Bomb for Business?
Posted by Sue Waller on Thursday 17 November 2011
September’s high retail price inflation (RPI) figures could see hikes in business rates bills from April 2012. At a time when the UK economy is struggling to maintain weak growth, the last thing businesses need is a record annual rise in their rates bills.
Business rates are calculated using a national multiplier based on September's RPI which stood at 5.6%, the highest figure since 1991. If the government chooses to implement this then many businesses will be hit with a huge increase next year at a time when many are already facing rising prices and slowing demand.
Business rates are a tax on property which all businesses are liable for irrespective of their ability to pay. Whilst small business rate relief is very welcome, it still appears that business rates account for a larger proportion of the turnover of a small business than they do for larger businesses.Therefore, any increases have a disproportionate effect on small business.
We raised this issue with the British Chambers of Commerce and a letter has been sent to the Treasury highlighting the significant impact on business in the current economic climate. The Chancellor has also been urged to publish the business rate multiplier for 2012/1013 rates early enough to allow businesses to prepare for the changes in April 2012.
The Government does have a choice on this - they are in the driving seat as to whether this rise goes ahead or not. With the economic recovery faltering we are asking the Chancellor to freeze business rates at the 2011/12 level for 2012/13. This would avoid unnecessary strain on business finances, help support employment and enable businesses to retain money for much needed investment.
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