Rates shock to small business growth
A significant proportion of small businesses across the UK are preparing to reduce investment and staff costs once business rates rise next month, according to a new survey from the Federation of Small Businesses (FSB). The research finds that more than a third of small firms expect to see their business rates increase from 1st April. Of those facing a rate rise, 44% of FSB respondents say their business rates will eventually increase by over £1,000 per annum. And 21% expect to see their annual bill increase by more than 40%.
Of the one in three SMEs facing a rise in rates, more than half expect profits to fall and four in ten are set to increase prices. Crucially, 55% plan to reduce, postpone or cancel investment in their business.
The survey data also indicates that of those small firms facing an increase in their business rates, 19% may ultimately consider closing down or selling their business as a result of the hike in their bills.
Mike Cherry, FSB National Chairman, comments: “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.”