The spring 2017 budget confirms business rates to cause pain in the south east
Business rates still set to cause severe pain in south east
The Budget’s extra £435 million business rates relief package will go a considerable way to mitigating what many had feared would be a spate of corporate insolvencies, an expert believes.
But Chris Newell, a partner in business restructuring and recovery specialists Quantuma, who had cautioned that a “perfect storm” was brewing, particularly for sectors like retail, care homes and leisure, said firms would remain under pressure and urged them to get a “survival plan” in place.
Business rates rise on 1 April, the first jump in nearly ten years.
London and the South-east, after its property price explosion over recent years, bear the brunt with all other UK regions seeing a reduction.
Despite £3.6 billion of transitional relief to help more than 140,000 smaller businesses, the Chancellor accepted that more needed to be done, with some businesses facing an alarming cliff edge and independent retailers in some high-value areas also struggling.
The new package sees further support to businesses facing the steepest hikes of up to 42 per cent for large properties in 2017-18 and 50 per cent in 2019-2020.
The Chancellor announced help for businesses coming out of small business rates relief so none would pay more than £600 more in business rates this year than they did in 2016-17. Funding for local authorities will allow them to provide £300 million of discretionary relief to provide help to businesses most affected by the revaluation.
And from April 2017, pubs with a rateable value up to £100,000 will be able to claim a £1,000 business rates discount for one year.
Mr Newell noted: “As previously set out, in a worst-case scenario businesses with a medium property faced increases of 250 per cent over a five-year period. For those with larger properties the news was even grimmer, suggesting that rate increases of 350 per cent could be experienced.
“Hopefully the changes introduced by the Chancellor will go some way to taking away the worst of the pain.”
And Mr Newell also welcomed the prospect of another more detailed examination of the business rates system.
The Chancellor agreed there was scope to reform the revaluation process, “making it smoother and more frequent, to avoid the dramatic increases that the present system can deliver”.
He promised to set out the Government’s preferred approach in due course and would consult on it before the next revaluation is due.
Mr Newell commented: “Given all the uncertainty about Brexit, and the unprecedented economic times we are living through, it is right that the focus remains on making the system more responsive.”
Meanwhile, Quantuma, which has six offices across the south of England, is already advising businesses on steps they can take.
Mr Newell said: “Owners should make themselves aware of what impact the rates increases will have on their business and seek to ensure that they are prepared. These may continue over several years and so it might be necessary for costs to be cut, prices to be raised, or a combination of both
“If you find your business in financial distress then it is always best to take early advice.”
Quantuma is offering a free, no obligation. initial consultation to provide various options.
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For further information, please contact:
Andy Skinner, Managing Director, ASAP PR – 07990 978257
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Quantuma LLP, Vernon House, 23 Sicilian Avenue, London, WC1A 2QS
Tel: 07464 545678
Notes to Editors
Quantuma LLP is a leading restructuring and insolvency practice delivering partner-led solutions to businesses and individuals facing financial distress with offices in London, Southampton, Marlow, Watford, Brighton and Bristol.