Chancellor urged to make concession to London’s small firms on business rates
FSB calls for business threshold to be raised to £20,000 in inner London as small businesses cite rates as their single biggest issue
The Federation of Small Businesses (FSB) has called on chancellor Philip Hammond to make a London business rate concession as it emerges 74% of companies in the capital cite the rate increase as their single biggest issue.
It’s estimated that the rate hike on April 1 will see London’s micro businesses paying £17,000 each, while the city will see an increase of £9bn over the next five years.
Another 36% of respondents to the FSB survey said economic uncertainty was the biggest issue they faced, while 33% claimed it was recruiting the right staff.
40% of those surveyed said they expected their business rates to increase by more than 20%, with 31% admitting they are unsure of how the change will affect their business.
As a result, the FSB and Camden Town Unlimited Business Improvement District (CTU) have called for the rates threshold to be increased to £20,000, in inner London, and £15,000 in outer London, allowing smaller firms to avoid tax.
This threshold increase would cost an estimated £100m, which the FSB describes as a “comparatively small amount in the context of the £28bn revenue derived from business rates nationwide”.
Sue Terpilowski OBE, FSB London chair, commented: “The business attraction of London is that it has a strong ecosystem of support services from the micro and small business community.
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“Some of these businesses are the ones that become high growth companies from a standing start, often in the high tech sectors. We must ensure that this support system remains in place to keep the UK economy and the London economy thriving.”
Simon Pitkeathley, CEO of CTU, added: “This research confirms what we have been hearing from the businesses we represent. The new business rates will drive firms out of London, force some businesses to cut staff or close down altogether.
“Given the importance of London’s economy to the rest of the UK, this will have destabilising consequences. Make no mistake, if London’s businesses take a hit, the rest of the country will feel it.”