Business rate rises set to stunt small firms’ growth – survey
28th February 2017

Many small businesses are set to reduce investment and staff costs once business rates rise next month, according to a new survey from the Federation of Small Businesses.

The research finds that more than a third (36%) of small firms expect to see their business rates increase from 1 April. More than half of those (54%) expect profits to fall and 38% are set to increase prices, while 55 per cent plan to reduce, postpone or cancel investment in their business.

Some 44% say their business rates will eventually rise by more than £1,000 per annum and 21% will see their bill increase by more than 40 per cent.

FSB National Chairman Mike Cherry said: “The business rates system is an unfair, regressive tax which hits small firms before they’ve had the chance to make their first £1 in turnover, let alone profit. Our survey shows the delayed revaluation harms too many small businesses who face unsustainable and unaffordable rises.

“This is particularly true in London where we urge the chancellor to raise relief thresholds as part of his spring budget. This will help protect hundreds of small businesses currently left out in the cold. A small hardship fund designed to assist pockets of firms throughout the country would go a long way to resolving the anxiety felt throughout the small business community.”

The survey data indicates that of those small businesses facing an increase in their business rates, almost one in five (19%) may ultimately consider closing down or selling their business as a result of the hike in their bills.

Mike Cherry continued: “Profitability across the UK small business community is already falling. The costs of doing business for small firms are now at their highest levels since early 2014. The last thing we need is a business rates burden so heavy that it threatens the future growth prospects of our entrepreneurs.

“The seven-year gap between this year’s revaluation and the last has stored-up all kinds of problems for our business community. The solution is for the chancellor to use his spring budget to announce a cross-party commission to propose measures for a replacement business tax system linked fairly to the ability to pay."

www.fsb.org.uk