New business rate changes, as a result of the government’s recent property valuations, are calculated by looking at a property’s rateable value, and the rate in the pound that is set by the central government. The change in business rates took place in April 2017. Although these changes are considered to be ‘fiscally or revenue neutral’ by the government, the changes will see a redistribution of the tax burden among businesses.
Drops For Some, Rises For Others
The business rate changes may or may not affect your business. Some companies will see a rise in their business rates, whilst others may see a drop or no change at all. Depending on the health of your business, these changes may or may not affect your business.
A Large Portion Of Expense
After your business has paid its staff costs and rent, the tax it pays on the space it uses is frequently its largest expense. If your business was experiencing some sort of financial difficulty prior to the implementation of these business rate changes, the unfortunate possibility is that your struggles may worsen, depending on the size and location of your company.
How Some Retailers May Be Affected
Colliers International suspected that over 300 retail stores across Britain would experience a decrease in their business rates. However, Colliers also expected increases for some businesses in London and the South East.
Being Aware Is Key
As a business owner, it is absolutely crucial that you understand how business rate changes will affect you as soon as possible. Not being aware of this can threaten your business, especially if you’re struggling financially.
One thing to understand is that these business rate changes will not be implemented in one fell swoop. Rather, they will be implemented gradually. The government will provide businesses with a transitional arrangement to help them adapt.
How The Transitional Arrangement May Affect Your Business
During the government’s transitional arrangement, the amount that your business rates can increase each year will be limited. This arrangement will provide over 600,000 business properties with a cushion in the first year. If your small business is facing a business rate increase, your bills will rise gradually over the next five years.
Larger businesses located in areas where a sharp increase in property valuations have been recorded will see a significant increase in their business rates. If your particular business property valuation is lower, you will see your rates bills fall gradually over the next 5 years.
If your property has been valued at a rate of £12,000 or higher, business rate payment is mandatory. If you are a small business, you have several options for helping you lower your business rates.
Exemptions & Rate Relief
If your business requires agricultural land or is operated from within a religious building, you will be exempt from business rate payments. Relief of up to 80% is available if you are a charity or a sports club. As well, if your business is located in an enterprise zone, or your property was recently occupied or is empty, you may also be able to apply for business rate relief.
Businesses located in the countryside having a local population of below 3,000 will be able to apply for between 50% and 100% off their business rates, and for businesses valued at between £12,000 and £15,000, some tapered relief will be available.
Questions? Call An Insolvency Practitioner
If you have concerns about your business’s ability to pay its bills and/or are unsure how business rate changes will affect you, it’s a good idea to contact an insolvency practitioner. We offer a free consultation to go through all your options and help you choose the best course of action.
The most important thing to consider is time; ignoring your situation will only worsen it. Our insolvency practitioners understand the difficulties struggling businesses face and will work with you to ensure that you can rectify your financial matters to the satisfaction of all involved.