UK firms ask for flexible rates

The UK’s SMEs are overwhelmingly calling for business rates to be made both simpler and more flexible, research from Close Brothers Asset Finance reveals. Overall, the figure stands at 71%, with businesses at the larger end of the scale feeling particularly frustrated (see table, below).

Business Rates are a tax on business properties set by the government; they are collected by local authorities and are the way that those who occupy non-domestic property contribute towards the cost of local services.

‘According to the latest advice, business rates are worked out based on a property’s ‘rateable value’, which is its open market rental value, which is in turn based on an estimate by the Valuation Office Agency,’ said Neil Davies, CEO, Close Brothers Asset Finance. ‘Rates can be estimated by multiplying the rateable value by the correct ‘multiplier’, an amount set by central government.

‘Our study has found that it’s a nuanced picture out there, and what I mean by that is that the call for clarity is not driven by cost concerns. 51% of those polled feel that the rates they pay are ‘just right’ against 32% who feel they are ‘too expensive’, which is consistent across regions, industries and business size.

‘In addition, more businesses (44%) feel they are getting value for money compared to those who feel they are not (39%).’

Q: Should business rates be made simpler and more flexible?
Turnover UK average Under £250k £251k – £500k £501k – £1m £1.1m – £5m £5.1m – £10m £10m +
Yes 71% 46% 72% 79% 79% 84% 83%
No 13% 9% 16% 16% 15% 13% 12%
I don’t pay business rates 16% 45% 12% 5% 6% 3% 5.%

Business rate relief

There is a strong sense that not enough is being done to assist businesses with rate relief, which is handled differently in England, Scotland, Wales and Northern Ireland.

‘Steps are being taken, as demonstrated by an initiative that’s been in place from 1 April 2017 that saw 100% relief, doubled from the usual rate of 50%, for properties with a rateable value of £12,000 or less,” said Neil. “That said, the message from SMEs is clear that more needs to done.’

Q: Is enough being done by the government to assist businesses with business rate relief?
Yes No I don’t pay business rates
UK average 36% 49% 15%
North East England 44% 38% 19%
North West England 36% 53% 11%
Yorkshire/Humberside 36% 43% 21%
East Midlands 30% 54% 16%
West Midlands 48% 43% 10%
East Anglia 33% 54% 13%
Greater London 50% 40% 10%
South East England 34% 51% 15%
South West England 34% 42% 23%
Scotland 31% 50% 19%
Wales 36% 58% 7%
Northern Ireland 31% 69% 0%
Ireland 16% 61% 24%

Rate rises
Rates have been rising steadily in most regions over the past two years with nearly one in 10 saying they’ve risen ‘steeply’. Yorkshire, London, South West and Scotland experienced above the UK average rises while only two per cent of SMEs have seen a decline, with the West Midlands at seven per cent the only region above the national sentiment.

Q: Over the past two years have you seen your business rates:
Rise steeply Rise steadily Remain the same Decline steadily Decline sharply Don’t pay BR
UK average 9% 47% 28% 2% 0% 13%
North East England 8% 48% 29% 0% 0% 15%
North West England 5% 62% 24% 0% 0% 10%
Yorkshire/Humberside 14% 37% 24% 3% 0% 24%
East Midlands 9% 42% 33% 3% 0% 13%
West Midlands 7% 49% 32% 7% 0% 5%
East Anglia 10% 53% 25% 0% 0% 13%
Greater London 13% 42% 36% 2% 0% 7%
South East England 7% 49% 28% 0% 2% 14%
South West England 11% 41% 27% 0% 0% 22%
Scotland 11% 50% 21% 1% 0% 17%
Wales 9% 49% 31% 0% 0% 11%
Northern Ireland 13% 44% 44% 0% 0% 0%
Ireland 7% 47% 27% 3% 0% 16%