Thursday 29 December 2016

PM Theresa May Urged To Reconsider Penalty Rises In Business Rates As Companies Facing Hikes Of Up To 400pc

Theresa May

Theresa May is being urged to reconsider "penal and unfair" rises in business rates amid warnings that some firms face being hit with a huge rise in their bills.

<>The new rates, which take effect in April and represent the first change in almost a decade, will see businesses paying the price for increases in property prices since 2008.

For the first time the Government will be able to charge some businesses an extra 42 per cent per year after a cap, which set the maximum amount bills could increase by at 12.5 per cent, was lifted

The huge rise in rates in parts of the country has led to warnings that businesses will be left struggling to survive and added to mounting calls for the "antiquated" system to be overhauled.

Some retailers say the changes mean their annual business rate bill rise by more than 400 per cent by 2022.

Business leaders urged Mrs May to do more to limit rises in business rates or even delay them entirely until after Britain leaves the European Union.

They warned that businesses are facing a "perfect storm" of rising rates, the increased cost of the national living wage and uncertainty surrounding Brexit.

<>pIt is the latest in a series of clashes between the Prime Minister and business leaders after she used her speech at the Conservative Party conference in September to vow to end "irresponsible" corporate behaviour.

Craig Beaumont, head of external affairs at the Federation of Small Business, said: “Business rates is a fundamentally flawed, regressive tax not linked to ability to pay.

"The upcoming revaluation shows how small businesses in London now need special help, with many reporting increases as high as 100 per cent.

"When the national living wage starts to bite you'll have a perfect storm of rising labour costs, business rates and Brexit uncertainty will threaten the survival small businesses. We want to see special help for London in particular."

Business rates, which date back to 1601, are calculated according to the rental value of the property a company uses.

It leaves businesses with large premises paying huge annual fees, while online retailers that only need small buildings pay relatively low levies.

The revaluation in April, which represents the first for seven years, will lead to companies paying rates which have been calculated to take into account the rise in property prices since 2008.

It means many businesses in the South East will face soaring rates while others in areas where High Street rental prices have fallen will benefit.

Following protests from businesses Philip Hammond used his Budget to reduce the cap on business rate rises from 45 per cent to 42 per cent, but business leaders say it is still far too high. They point out that previously business rates rises were capped at 12.5 per cent.

A new analysis yesterday showed that the 3 per cent reduction in the business rate cap provided businesses in London with a "paltry" £156million of relief while the capital's overall bill soared by £9.4billion.

The British Chambers of Commerce warned that the increase in business rates risked making Britain less competitive. It urged the Government to focus on reducing rates instead of cutting corporation tax.

Mike Spicer , the organisation's director of research and economics, said: “Government needs to shift the focus away from the headline corporation tax rate to costs such as rates which are much more significant for most businesses.

"The focus on a lower corporation rate is a big frustration for most businesses and only there to attract foreign investors.

“We’ve got the highest local property taxes in the developed world, and can we really be competitive with them?"

Jerry Schurder of Gerald Eve, a firm which advises businesses on rates, said: "The Government has got the numbers wrong, it is penal for businesses. I am sure that increases of that sort of size could lead to business closures, relocations and possibly to move overseas where costs."

Jace Tyrell, chief executive New West End Company, said that the Government should consider delaying the rise in business rates in London until after Britain has left he European Union.

Sadiq Khan, the Mayor of London, has joined an alliance of 43 business groups and in calling for the Government to do more to help businesses to cope with the hikes.

A Government spokesman said: "We’re committed to supporting business and last year cut business rates by £6.7 billion.

"This revaluation improves the fairness of rate bills by making sure they more closely reflect the property market.

"Nearly three quarters will see no change, or even a fall - including 600,000 who from next April will have their bills cut altogether. To help businesses transition to the new rates we’ve set aside £3.4billion, of which £1 billion is for London alone.”



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