Business rates – the enemy of growth and investment

Business rates are stifling business growth. The next Government should prioritise reform

Wed 18th, Mar

What’s the most powerful deterrent for people thinking about starting their own business? Lack of finance? Fear of failure? Well, I would argue that we should look no further than business rates.

They also deter investment and, because they are based on the value of the property a business occupies rather than its profits, they penalise companies that need larger premises and the bills bear no relation to ability to pay.

Business rates are a principal reason why our high streets have too many empty units. What makes things worse is that traditional retailers are often in competition with internet giants whose tax arrangements they can only envy.

While corporation tax is deferred until a business starts making profits, even the smallest enterprise with the least access to finance has to pay often crippling charges from day one.

We have supported the British Chambers of Commerce in its call for a freeze on business rates until the revaluation scheduled for 2017.

Chancellor George Osborne, who postponed the revaluation until then, announced that the Treasury would review business rates in his last autumn statement.

Labour leader Ed Miliband has made encouraging noises about the need to cut business rates for small firms but has proposed to couple this with a delay to cuts in corporation tax. This would help struggling businesses which may have no profits to pay tax on, but for most it would simply be giving with one hand and taking away with the other – something politicians are good at.

The problem with business rates is that the system is so badly broken and such a deterrent to enterprise that it needs to be completely reformed. Tinkering just won’t do.

The problem is that this tax is worth more than £25bn a year to the Exchequer and it works as a sort of cross-subsidy between different parts of the country, with the surplus from richer districts being remitted in grants to support local government spending in poorer ones.

Therefore, any reform of the system may need to be considered in tandem with devolution in England and, unfortunately, that can only delay the process.

Nevertheless, we hope that whoever forms the next government will realise that business rates are making businesses ill – and a remedy is needed quickly.

What's your reaction to Budget 2015? Let us know

Read More
Leave a comment

Happy 9th Birthday 6th Door Ltd

Tue 19th, May

As I’m leaning on the stand-up desk in my makeshift home office, that over the weeks has been turned into a video and podcast recording studio

How to take back control of your water costs

Fri 13th, Mar

While most businesses already have a comprehensive strategy in place for their electricity and gas consumption, water management is often overlooked.

How to choose an energy consultancy

Fri 13th, Mar

Most business owners recognise the advantages of shopping around for the best energy deal, but without the time, resource and expertise to find the best tariff, it can be an almost impossible task.

Business energy: Don’t get caught out by rollover rates

Fri 13th, Mar

As a busy business owner, you may feel there are not enough hours in the day to secure your next energy contract. You know you’ll get around to it, but when you’ll get around to it is another matter.

Business water matters – Top 3 water saving tips

Fri 13th, Mar

Water is often referred to as ‘the forgotten utility’. While many large businesses are clearly focussed on their comprehensive energy strategies, it seems many are yet to implement a strategy around managing their water usage.

Know where your cloud data is stored or risk a GDPR fine

Thu 27th, Feb

For businesses who have chosen cloud-based data hosting services there’s a temptation to relax and think “great, we’re paying someone else to take care of our data, we don’t need to worry about it any more.”

Transparency plans could slow down region’s business growth

Thu 27th, Feb

Efforts by regional start-up initiatives that have led to Merseyside outperforming the rest of the UK when it comes to business growth could be hampered by new government proposals, a leading legal expert has claimed.

Backup or risk losing your business

Thu 13th, Feb

Maintaining a robust backup is hard work, it’s important to not only build the correct solution for your business and trust your IT support provider to look after it, but to also maintain a sense of urgency as a business owner to...

Information Destruction and Compliant Data Handling in the Education Sector

Thu 13th, Feb

Identity theft costs the UK economy £5.4 billion and a recent BSIA report showed 169,592 cases of identity fraud, representing an increase of 49% over the previous year.

Give Your Business Utilities a Refresh for 2020

Mon 20th, Jan

January is a time for reflection for most people and this includes business owners, with the new year bringing with it an opportunity to take stock of performance during the past 12 months, create goals for the year ahead, and ensure...