A Federation of Small Businesses (FSB) survey shows that 55 per cent of UK small businesses are preparing to reduce investment once business rates rise next month.
The research finds that more than a third (36 per cent) of small firms expect to see their business rates increase from 1 April.
Of those surveyed, 54 per cent said they expected profits to fall and 38 per cent said they will increase prices. Of those small businesses facing an increase in their business rates, almost one in five (19 per cent) may ultimately consider closing down or selling their business as a result of the hike in their bills.
Mike Cherry, FSB National Chairman, 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. The major win at the latest budget to exclude 600,000 small firms from the business rates system remains hugely important. However, 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 within the small business community.”
John McDonnell, Shadow Chancellor, is today meeting with groups including the IoD, FSB and the British Chamber of Commerce in a bid to push for reforms.
Mike Cherry says: “Business rates are an outdated tax. FSB is keen for all political parties to help those small firms hardest hit by the current revaluation, and to start to focus on fundamental longer-term reform of business rates to make sure it’s fair for small firms.”
In a separate report, insurance group RSA has forecast that a 2.7 per cent rise in inflation, in turn pushing up the price of imported goods, would add £6.8 billon to smaller company costs. They said that 2017 was shaping up as a “tough year for businesses”, calling for the Government to “mitigate the negative effects that increasing business costs could have on the economy”.
Specialist advisers to UK SMEs
At Beavis Morgan, we have extensive experience of providing specialist advice and planning to small and medium sized (SME) businesses across a range of sectors. We work with our clients to put processes in place which make it easier to run your business and to maintain effective management of your company’s working capital. We also assist with management accounts, enabling better control of your financial situation and awareness of the business in real time, enhancing planning for the peaks and troughs.
We are on hand to assist you to remain profitable and increase your net worth.
Contact Steve Govey or your usual Beavis Morgan Partner for further information about how we can assist you and your business.
Keep up to date with news and views from the Spring Budget as it arises.