Business rates hike: 'I think I may go out of business'

An ongoing Government consultation​ into the revaluation of business rates, which will be enforced in April 2017, has been labelled ‘potentially disastrous’​ by the Association of Licensed Multiple Retailers, with a quarter of pubs expected to see a rate hike.

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Linda Arthur, director of New Media Bars, said the changes could force her out of business.

“We have had to put our retail prices up year after year, to accommodate the alcohol duty increases, as well as minimum wage rises, energy price increases and much more,” she told The Morning Advertiser​.

“We are now at risk of our business rates being increased due to the increased turnover figures that these increases have produced, irrespective of whether or not there has been an increase in profit.”

Many ratepayers will see only a small change in their rates bill at the revaluation, but some properties will see a "more significant change – both increases and reductions", the consultation states.

'Out of business'

“I think I may go out of business when the rates increase, which under the current system of valuation they will, even though my profit is next to nothing,” Arthur continued.

“I fail to understand why pubs and bars are evaluated for business rates based on turnover."

The Government consultation includes a proposed cap on increases of 5% only applying to the smallest businesses, with larger companies facing either a 35% of 45% increase limit. There will also be a cap on the reduction for businesses that see their rates fall.

Licensees have also been urged to check the newly published rateable values for pubs.

Preparation

The British Beer and Pub Association (BBPA) stressed the need for licensees to make sure they have made the necessary financial preparations for next year.

Businesses will be able to notify the Valuation Office Agency (VOA) of any obvious errors – and officially appeal to the VOA if there are any serious mistakes, under the Government’s ‘Check, Challenge and Appeal’ process, from April next year.

BBPA chief executive Brigid Simmonds said: “While we won’t know the final shape of bills until the Government decides on the multiplier, which is effectively the tax rate, it is still vital for licensees to be aware of this major change.

“There will certainly be premises that will see an increase in their rateable value, particularly where the business has thrived over the past eight years, and we will be looking at ways to mitigate any sharp rise in bills for these premises.

“We will continue working for relief for pubs – industry pressure has already seen reforms that will mean pubs with a rateable value of £12,000 pay no business rates at all.”

This is the first time valuations have been amended since 1 April 2010.

Plea to Government

Martyn Cozens, director of independent on-premise at Molson Coors, urged the Government to keep the interests of the pub industry in mind in its business rates revamp.

“The beer and pub industry plays a vital role in the UK economy, contributing £22bn to UK GDP and supporting almost 900,000 jobs,” he said.

“Increases in business rates could be disastrous for thousands of eating and drinking venues, some of which are struggling in the current economic climate. We urge the Government to protect these establishments who play a vital economic and social role in society.”

Will you be affected by next year's business rates changes? Email byv.tebff@jeoz.pbz