Small businesses hit hardest by delays to rate compensation

7th June 2017

Small business owners have spoken out against delays to compensation promised to those hardest hit by rises to business rates.

Earlier this year the Government reviewed all rates so they could be matched with how much rent each business pays from April.

Some have experienced rates rises of up to 3,000% after the changes in April, due to a delayed revaluation of commercial property values last year. Thousands of companies were told they would receive financial assistance to reduce the impact of increased business rates, the tax based on the rental value of commercial properties, which has not been reassessed for the past seven years.

Although most small businesses were not affected, there was an uproar on behalf of those that did.

The Spring Budget outlined measures, including a ‘hardship fund’ of £300 million, that would help those small businesses facing the biggest increases. However, that promised help has still not arrived.

Local authorities, who issue the bills, say that they are waiting on the Government to provide advice on how to proceed.

The Federation of Small Businesses (FSB) claimed councils were saying they could not act because of purdah, the period of time in the UK between an election and the final results which affects the public sector.

David Gauke, Chief Secretary to the Treasury, said that the Government was urgently trying to push through the compensation, after receiving complaints.

Speaking at a small business election hustings, a meeting at which candidates address potential voters, at the Imperial War Museum, Mr Gauke said: “We are trying to get [the compensation package] through as quickly as we possibly can. There is a big compensation package... to help those who are seeing significant increases.

“We have to remember one of the things we have done is extend small business rates relief which means a lot of the smaller businesses who previously were paying rates now no longer do.”

Mike Cherry, National Chairman of the FSB, said: “The first order of business for the communities secretary in the next government should be to get a grip and make sure the promised help is delivered in the first month of office.”

John McDonnell, Shadow Chancellor, and Baroness Kramer, the Liberal Democrat business spokeswoman, have also expressed concerns.

Despite providing details, Mr Gauke, Mr McDonnell and Ms Kramer agreed that there needed to be a fundamental reform of the tax to level the playing field between the high street and online retailers. They also concurred that business rates should affect companies who had physical operations.

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