Small businesses to be hit hard by business rate rise

Firms across the UK face significant increases in their business rates, as a result of new rateable values, a business pressure group is warning.

This month, the Valuation Agency will post through the doors of 1.74 million businesses their new rateable values, which will eventually determine changes in the business rates they pay.

On average, retailers across the UK can expect to see their rate valuation increase by 17.5 per cent as of April 2005. But the Forum of Private Business, which represents small and medium sized companies, is warning that many businesses, particularly those on popular high streets and with larger premises, will be hit with much higher hikes.

FPB Chief Executive, Nick Goulding, said as a business tax, business rates start at a far higher level from the first pound than the other major taxes - Corporation Tax, National Insurance and VAT.

"The Small Business Rates Relief (SBRR) scheme, which will also be introduced in April 2005, is badly targeted,' he said. "Its positive effects will be short-lived and it will actively disadvantage businesses occupying premises with a rateable value (RV) of more than £15,000. Hardest hit will be high street hotels, pubs, restaurants and tenanted businesses."

Mr Goulding said FPB has long been fighting for the introduction of a simple, effective and transparent tapered Small Business Rates Relief based on the size of business instead of the size of the property.

"FPB's recent campaigning has been acknowledged by the Local Government Minister Nick Raynsford MP, as being the driving force behind improvements to the initially proposed scheme protecting those businesses with RV's of up to £15,000 in England,' he said. "But under the new proposals a number of private business that occupy large premises will still miss out on rates relief and even face a surcharge. Had the Government adopted FPB's full proposals, which suggested a surcharge threshold of £40,000 RV, the majority of small businesses would have benefited."