April 2017 brought with it a new challenge for UK businesses, as the two-year delay on the rise in business rates – based upon the revaluation of the value of business property – finally hits.
With commercial property prices rising exponentially over the past few years, some areas of London are facing rate increases of 100%.
We know anecdotally that rate rises are a concern for SMEs, many of whom already operate tight profit margins. A sudden increase in overheads is the last thing they need and the consequences could be far-reaching. For some, careful financial management will be needed to weather this storm.
One of the key elements of the debate is over the ‘fairness’ of the changes. It seems to many that the changes favour large businesses who have giant warehouses located out of town; many of these have seen a cut in their bills while smaller businesses that trade in town centres have been hit with large rises that they can ill afford.
In his Budget, Chancellor Philip Hammond announced three measures that offered some welcome relief to business owners in various sectors. Any business coming out of small business rate relief will benefit from an extra cap meaning their bills won’t increase by more than £50 a month; there will be a £1000 discount for nearly all pubs and a £300m fund will be made available to councils for discretional relief.
Running a business is never straightforward and it’s clear that the rate changes are going to pose problems for some. The Institute of Directors has called the system “painfully out of date” and devolved governments in Scotland and Wales have already announced changes to their systems.
No one doubts that there’s a better system out there but until the government is minded to develop one, and given the current political situation this seems unlikely to be a priority, business owners in England and Northern Ireland must do their best to swallow any rate rises that they’ve incurred.
In our experience, we find that UK business owners are incredibly resilient. The significant majority of businesses are run by passionate, skilful people who have the ability and vision to overcome the many challenges that they face. That’s not to suggest that a hike in business rates isn’t potentially serious for many but rather that time and again, businesses find a way to survive, even to thrive, in difficult times.
At Ultimate Finance we’re experts in providing businesses with the cash they need. Whether it’s for a large VAT bill or to meet a large order that’s just landed; whether it’s to navigate the specialist challenges of the Recruitment or Construction industries or whether it’s to keep cashflow at a necessary level, we’ve got the experience and the expert staff on hand to give the very best advice.
We can’t make the challenge of rising rates go away but we do understand them and can help support SMEs with the right funding options to success whatever the circumstances.