Retailers hit as business rates soar

Retailers across England face a 15.7 per cent increase in their business rate bills, according to the Federation of Small Businesses.

This week around 1.7m bills will be issued to businesses in England detailing their rates liability for the new financial year.

Bills are set to soar because of a combination of three factors:

• an increase of more than 3 per cent to account for inflation,
• the recent five-yearly revaluation of business premises that has led to a huge increase in the rateable value of shops, particularly in affluent areas,
• an extra 4 per cent increase to safeguard the government against any revenue it will lose from subsequent successful revaluation appeals.

FSB Business Rates Chairman Roger Culcheth said:

“Many small firms will see an increase in their business rate bills but retailers across the south of England face the biggest hikes.”

“Business rates are the second or third highest item of expenditure for most small firms and are five times more expensive as a proportion of turnover than they are for large companies. The odds are already stacking up against small shops and we are concerned that some independent retailers will find it impossible to absorb these additional costs.”

“Rates relief gives some protection to small businesses but many small shops in affluent parts of the country fall above the £10,000 threshold. Small business rates relief should be extended to all business premises with a rateable value of less than £25,000.”

Case studies

Burford Motor Company in Boscombe, Bournemouth

The Burford Motor Company is a small car showroom and workshop in Dorset. Father and son Tony and John Nixon have run the business out of premises in Boscombe for the last ten years. At the recent five yearly revaluation, the rateable value of their premises increased by 72 per cent to £17,000. As a result their rates bill has increased from £4,373 per annum in 2004/5 to £7,055pa in 2005/6. The Nixons will be entitled to transitional relief, but their business rates will still go up by 22 per cent this April.

Toys,games,models in Winton, Bournemouth

Toys,games,models is an example of a genuine small business with a rateable value above the threshold for small business rates relief. Neil Atkinson has been running Toys,games,models for the last three years, specialising in products not sold by supermarkets or multiples. He works on his own and employs no staff, but with a rateable value of £11,500 does not benefit from small business rates relief. As a result his rates bill is £4,800 per annum. A similar shop, one mile away, does benefit from rates relief and will be paying £900pa from April.