Groups representing over 100,000 early-stage businesses have written to Chancellor George Osborne to demand an urgent cut in business rates to help them cope with the aftermath of Brexit.
The list includes the Federation of Small Businesses, the British Chambers of Commerce, and the British Retail Consortium.
Reforms were due to happen in 2020, but they want these to happen sooner. They’re also calling for the whole system to be simplified, and many firms relieved of having to pay rates at all. In return, businesses say they will ringfence the money they save from a reduction in business rates to reinvest in their firms.
At the moment, the business rates system is based on property, not on profit – so if you’re starting out in a prime location such as central London you’re likely to face a considerable bill, regardless of how much money you’re making. It also depends on the state of your property, so if you’ve renovated this could push your bill up further – discouraging reinvestment into your property.
To add to the problems, many of the valuations of the areas are out of date. In the wake of the last financial crisis, many areas saw property prices fall. But as yet, business rates haven’t reflected this, meaning that many business owners are paying rates based on outdated figures.
The Chancellor announced that corporation tax will be cut to less than 15% in the wake of Brexit, to encourage growth, but this action from so many businesses shows that an overhaul of the system to make it simpler and less costly is urgently needed.
What do you think, and is your business affected? Tweet us on @virginstartup with your thoughts!