To add insult to injury for the commercial property industry in these tough economic times, the Government has announced that they plan to increase business rates for the next financial year by a further 5.6 per cent. This will be the highest percentage increase in over 20 years.
The rate will increase by a further one per cent compared to the last increase in April of this year, which was 4.6 per cent. The increase is derived from the retail price inflation index (RPI), published on 18th September.
The news comes as a double blow for commercial properties throughout the UK; many commercial properties will struggle to pay the rising energy costs during this winter and will then be hit with the rising business rates from April next year.
Andrew Cave, the Federation of Small Businesses chief spokesman expressed that the Government needs to take action: “Business rates are the highest overhead for a small business. At a time when they are struggling it will be another kick in the teeth next year when most businesses will hope things will be improving and their overheads are getting under control.”
However the rise in business rates would also hit empty commercial properties, which today stands at around one in ten, in town centres. Prior to April 2008, businesses were entitled to claim empty property rate relief; owners didn’t have to pay business rates if their commercial property was unoccupied. But since the relief was scrapped by the Government, business rates are payable after the first three months of a property being empty, if even it is still unoccupied.
The Government is expected to collect an extra £1.35 billion in rates from the rise next year, some experts have predicted. But do you think the Government is wise to increase business rates, when so many businesses are struggling to pay their bills as it is?
Ministry of Sound Commercial Property Victory