SMALL FIRMS FACE INFLATION-BUSTING HIKE IN BUSINESS RATES AS TRANSITIONAL RELIEF ENDS
• Nearly 67,000 small properties in England face big increases from April 2015• 5,000 properties will see rates bills being hiked by at least 33%
• One Bristol newsagent faces eye-watering 534% rise in annual rates bill
Thousands of small firms in England face inflation-busting hikes in their business rates bills when transitional relief is removed in April 2015, according to the latest research from property consultancy and business rates experts Gerald Eve.
Some 67,000 small properties – including 19,000 shops, 2,500 pubs and cafes and 4,700 workshops – will face rate bill rises well above inflation, with 6,500 hit with increases of at least a third and 600 businesses having to come to terms with hikes of 100% or more. At their most extreme, the increases will be crippling: Gerald Eve has identified a newsagent’s kiosk in Bristol that faces an eye-watering rise of 534%.
With small properties typically occupied by small and medium enterprises (SMEs) it is such businesses that will bear the brunt of the increases, although over 4,000 larger properties – including landmarks such as The Oval cricket ground, London Zoo and Castle Howard in Yorkshire – will also attract significant hikes. Examples identified by Gerald Eve include a high school in West Yorkshire whose rates bill will surge by over £61,000 from £22,249 to £83,328 and a Liverpool hostel which faces a £49,000 rise from £9,719 to £58,032.
Introduced following the 2010 revaluation, transitional relief was designed to assist firms facing large increases in their rates liabilities, phasing in rises over a five-year period. However, the Government’s controversial decision to postpone the 2015 revaluation, while neglecting to continue the transitional relief programme, has left the most-impacted firms exposed to sudden jumps in their rates bills in April 2015.
Jerry Schurder, head of rating at Gerald Eve, said: “The end of transitional relief and the two-year deferment of the 2015 revaluation have created a perfect storm that will see huge rises in business rates bills hitting the smallest firms hardest.
“Transitional relief was introduced to support those firms least able to cope with large rises in their rates liabilities, but Government policy will impose a double-whammy on many thousands. Not only will they not benefit from the adjustment that a revaluation would have brought by aligning values with the market, but they will also face inflation-busting increases in their bills.
“We call on George Osborne to use December’s Autumn Statement to address this urgent issue, with any rises in business rates limited to no more than inflation. Longer term, the rating system needs overhaul to avoid radical leaps in bills and reduce SME’s exposure to such significant costs.”