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Business Rates Re-evaluation Explained

Here at Access Credit Management we realise the importance of small businesses here in the UK – they form the backbone of the British economy, comprising more than 99% of British companies across every sector.  We like to make sure that we bring our business readers all of the news and developments that will enable them to stay well informed and make the right decisions for their businesses.  Today we’re going to take a look at the first business rates re-evaluation since 2010 and see what it’s likely to mean for your business.

The next revaluation of all properties with regards to business rates will come into effect in April, 2017 and this is the biggest re-evaluation in a generation, so keeping up to date with the changes is essential for business owners across the UK.

Its good news for business owners in the north and in the midlands, they’re likely to be unaffected by the new rates and some lucky business owners will actually be better off in the wake of the changes.  When it comes to London, though, we’re looking at a very different picture.  As a result of a sharp increase in property prices across the capital, London businesses are facing an average increase of 11%, a massive hike.  The 11% is just an average and it’s not spread evenly across the City – some high-end fashion outlets are likely to see an increase in their rates of up to 415%!

Every five years the government conducts a valuation of properties in order to ascertain their rateable value.  The underlying values are taken from two years before that so the 2010 adjustment was based on property prices from 2008.  However, the 2015 revaluation was postponed for two years in order to avoid rising property prices – a move which has backfired because property prices have increased so heavily in certain areas, reaching record levels in London and the South East.  This delay which took place over an economically mercurial period has resulted in the UK business rates entering a complex phase that will have a significant impact on many businesses in Britain.

While many businesses are likely to benefit from reductions in their rateable value and experience a reduction in rates following years of overpayment.  However the outlook is bleak for many UK companies that will see a momentous increase in their rates that will have them struggling to maintain a steady cash flow.

According to Brian Palmer, tax policy advisor at the Association of Accounting Technicians (AAT), the government is being urged to introduce some measures that would ease the burden of rates that have a harsh impact on businesses that operate from commercial premises compared with those that do not.  The overall effect is likely to result in a financial landscape that’s discouraging for start-ups and independent businesses, both of which are vital for the future of the British economy.

If your business will be adversely affected by the changes, then watch this space for advice and information that will help you to keep your business afloat and maintain a steady cash flow during the challenging months ahead.