You may want to check your business rates, as the government announced its new rates today, with 25% of hospitality businesses expected to see an increase.
The new rates will see dramatic increases for some businesses, as soaring property values in parts of the UK will be reflected with higher fees. Likewise, areas that have experienced a fall in the value of property can expect to pay lower rates.
Usually reassessed every five years, the previous rateable values set in 2010 were based on property values in 2008. However, the new rates – which will come into force on 1 April 2017 – are based on rateable values as of 1 April 2015, after the government took the decision to delay the changes. Property prices have changed dramatically during this period, meaning some businesses may be hit by steep increases.
However, the Chancellor's decision in the March budget, that the small business rate relief threshold will be raised to £15,000 from £6,000 is expected to benefit the majority of pubs.
Research undertaken by the British Beer & Pub Association (BBPA) in March suggested around 81% of pubs will benefit from the small business multiplier, small business rent relief or both from April 2017. Businesses are set to save around £1,100 per year on average, it says.
However, trade bodies are urging hospitality businesses to check their rates now. Businesses will be able to notify the Valuation Office Agency (VOA) of any obvious errors – and officially appeal to the VOA if there are any serious mistakes, under the Government's 'Check, Challenge and Appeal' process, from April next year.
'Our chief concern is that the cap on increases of 5% applies only to the smallest businesses, with larger companies facing either a 35% of 45% increase cap paid for by a cap on the reduction for those businesses that see their rates fall,' said Association of Licensed Multiple Retailers (ALMR) chief executive Kate Nicholls. 'In addition, there is only a 6-month period for businesses to prepare for these increases.
'It is still likely that 1 in 4 businesses will see their rates increase. At such a politically and economically unstable time, such a move could be potentially disastrous for businesses. With businesses relying on transitional relief, we are urging the Government to reconsider introducing high street rate relief to ensure that bills are equitable and affordable.'
The BBPA has produced an online guide to help licensees navigate the process, available here. BBPA Chief Executive Brigid Simmonds said: 'Whilst we won’t know the final shape of bills until the Government decides on the multiplier, which is effectively the tax rate, it is still vital for licensees to be aware of this major change.
'There will certainly be premises that will see an increase in their rateable value, particularly where the business has thrived over the past eight years, and we will be looking at ways to mitigate any sharp rise in bills for these premises.'