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FSB data shows the need for the Chancellor to act on Business Rates at the Spring Budget

The Federation of Small Businesses (FSB) and Camden Town Unlimited Business Improvement District (CTU) are today urging the Chancellor to make a London business rate concession as a new survey of businesses in the Capital showed that the average micro businesses (with less than 10 employees) will be paying £17,000 in Business Rates in April 2017 (This equates to a Rateable Value of around £35,000).

Three quarters (74%) of businesses who responded to the FSB Survey said that ‘Business Rates’ was the single biggest issue affecting their business, followed by 36% who said ‘economic uncertainty’, and, one third (33%) who answered  that issues ‘recruiting the right staff’ was the main issue.

Four in ten (40%) businesses who are paying business rates told FSB that they expect to see an increase of above 20% in their Business Rates; whilst three in ten (31%) are simply unsure of what the change will mean to their business.

FSB and CTU are calling for the Government to create an increased inner and outer London Small business rate relief (SBRR) threshold that reflects the specific problems faced by small businesses in the capital.

  • In inner London FSB are calling for the threshold to be £20,000 Rateable Value for 100 per cent relief tapering to £23,000. 
  • In outer London where rateable values have increased by a lower percentage, we believe the threshold for 100 per cent relief should be set at £15,000 tapering to £18,000.

FSB estimate that increasing the thresholds to £15k in outer London and to £20k in Inner London would cost around £100m. This is a comparatively small amount in the context of the £28bn revenue derived from business rates nationwide.

FSB London Chair, Sue Terpilowski OBE, said:

“London is in serious danger of losing its vital support system of micro and small businesses. The average micro business will have to find £17,000 to cover business rates from April this year. But this increase must not be viewed in isolation as small firms will face an extra £2,600 in additional employment costs from Government policy in the 2017/2018 tax year, inflationary increases and a further increase in pensions auto-enrolment Costs.

“The business attraction of London is that it has a strong ecosystem of support services from the micro and small business community. Some of these businesses are the ones that become high growth companies from a standing start, often in the high tech sectors. We must ensure that this support system remains in place to keep the UK economy and the London economy thriving. We need to realise that the hard costs of operating a business in the Capital are starting to outweigh the benefits which simply does not make economic sense – and so tacking these burdens at the Spring Budget is critical.”

Simon Pitkeathley, CEO of Camden Town Unlimited (CTU), said:

“This research confirms what we have been hearing from the businesses we represent. The new business rates will drive firms out of London, force some businesses to cut staff or close down altogether. Given the importance of London’s economy to the rest of the UK, this will have destabilising consequences. Make no mistake, if London’s businesses take a hit, the rest of the country will feel it.”

FSB Rateable value london map

business rates london data

Notes to editor

  • The survey took place amongst small businesses in London between 2nd February 2017 and 14th February 2017. The survey received 129 responses.
  • FSB and Camden Town Unlimited will shortly be releasing research alongside Ramidus Consulting on the impacts of Business rates on small firms in London.
  • How businesses Estimate their business rates

    Multiply the rateable value (the figure that FSB want changed)  for your business with a ‘multiplier’ set by the government to estimate your business rates.

    A multiplier is the number of pence per pound of rateable value that you’ll have to pay in business rates, before any relief or discounts are deducted.

    Example

    Barbara has a business in England (outside the City of London).

    The rateable value of her business is £10,000, so she uses the 2013 to 2014 small business multiplier for England (46.2p) to estimate her business rates as follows:

    £10,000 (rateable value) x £0.462p (multiplier) = £4,620 (basic business rates)

  • What are FSB calling for?

    From 1 April, any business occupying a single property with a rateable value of £12,000 or less can claim 100% Small Business Rate Relief (SBRR). The rate of relief goes down gradually from 100% to 0% for properties with a rateable value between £12,000 and £15,000. These thresholds apply nationally and take no account of the reality that London Rateable Values that are significantly higher than the rest of the country.

    FSB is calling on the Chancellor to create a higher inner and outer London SBRR threshold that reflects the specific problems faced by small businesses in the capital:

    In inner London (comprising of Westminster, Kensington & Chelsea, Islington, Camden, the City, Hammersmith & Fulham, Southwark, Hackney and Lambeth) we believe the threshold should be £20,000 Rateable Value for 100 per cent relief tapering to £23,000.

    In outer London (all other Boroughs) where rateable values have increased by a lower percentage, we believe the threshold for 100 per cent relief should be set at £15,000 tapering to £18,000.

  • How many businesses currently receive Small Business Rate Relief in London?
    Based on 2011 data, the average percentage of properties claiming SBBR nationwide was 30 per cent, with some local authority areas approaching 50 per cent. In Greater London as a whole, the average was 16 per cent, and in most of central London the percentage was in single figures. Five central London boroughs made up the bottom of the table by rank, with only two per cent of businesses in Westminster able to claim SBBR. The City of London had only 185 businesses eligible to claim SBBR.

About FSB
As experts in business, FSB offers members a wide range of vital business services, including advice, financial expertise, support and a powerful voice in Government. Its aim is to help smaller businesses achieve their ambitions. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy.

About Camden Town Unlimited

Camden Town Unlimited (CTU) is the Business Improvement District for the Camden Town area representing more than 300 member businesses. The organisation has been appointed by the business community to improve the area as a place to work, live and visit. CTU is entirely accountable to its members and reports to a board of local business leaders.