44% of businesses based in London are worried about the forthcoming revaluation of business rates.
According to a new survey by the London Chamber of Commerce and Industry, 44% of businesses based in London are worried about the forthcoming revaluation of business rates.
The figure extends to 55% among those who employ more than 10 employees. A third of businesses said they did not know how they felt.
So what should London’s restaurant and pub owners expect from the revaluation? Here we examine what might happen to rates, and the impact this could have on the leisure and hospitality industry.
The new rates are to be announced in October 2016 and come into effect in April 2017. With the recent change of Prime Minister and Chancellor of the Exchequer, there is uncertainty in the Capital around how rates are expected to change.
The new rates are expected to be introduced in April 2017, meaning that businesses have roughly 6 months to prepare.
Opinion is split on whether rates will increase or decrease. The government has already claimed that they will be striking out in a different direction to the previous leadership, with Chancellor Philip Hammond claiming that the age of deep austerity is over.
Perhaps this means that the hospitality, leisure and retail sectors should expect good news when it comes to business rates. After all, growing economies require the establishment of more businesses, and for existing ones to flourish.
At the general election, the government promised “the most wide-ranging review of national business rates in a generation”. However, all major changes pertaining to corporation tax cuts and business rates reforms won’t have any real impact until 2020. This means that in the meantime, businesses are suffering under an outdated, cumbersome system.
There are two good examples of this: changes to the frequency of revaluations, and online sellers not being treated in the same way as more traditional selling models.
Under the existing model, pubs and restaurants account for 5% of GDP but pay more than 10% of all business rates. For some restaurant and pub owners, this seems unfair. This means that while a pub pays 15p a pint in business rates, a supermarket pays just 5p per pint. Online retailers have it even better, as warehouse values are far lower than prime highstreets property.
According to some commentators, the system should better reflect modern 21st-century life. Kate Nichols, chief executive of the Association of Licensed Multiple Retailers, says “operating costs are the biggest brake on potential across the sector. Pubs and restaurants pay more than a third of their turnover in taxes and the margin they have to invest and grow is small. Given the contribution those businesses have made to the economy and to job creation, that should give real pause for thought in No 11.”
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