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London businesses brace themselves for business rates hike

Businesses across the capital are bracing themselves for the prospect of higher bills today as the government reveals the outcome of its business rates review.

In what is the first significant revaluation of business rates since 2008, businesses in London and the South East are facing up to a significant hike in their rates from April next year due to rising property values.

From next year, rates will be based on a property’s value in 2015 instead of its pre-recession level in 2008, in which time the value of vast swathes of London commercial properties have skyrocketed.

In particular, restaurants and smaller retailers in central London are expected be the hardest hit with predictions that some could be facing increases of over 20%, while across the capital as a whole businesses could be facing up to a 14% jump on average.

According to Colliers International, 76 retail centres in Britain are likely to see an increase, with the majority of those in London and the South East while 300 may actually see a decrease.

Some form of transitional relief will be put in place by the government to help lessen the impact on businesses shouldering a significant increase, including a year one cap of 33% announced yesterday by the Department for Communities and Local Government.

However, some are saying that this still does not go far enough to shield businesses in the capital from an unsustainable increase in their bills.

David Jones, Senior Director of Business Rates at Bilfinger GVA, said that the cap announced yesterday, which includes an upper limit of a 45% increase, only applies to properties with a Rateable Value of over £100k, meaning many businesses will not be covered by the cap.

He said: “With uncertainty over Brexit and concerns over business relocations out of London, hitting business with significant and unexpected business rates increases seems poorly thought through.

“We have specific concerns for the vibrant medium sized retail and independent restaurants across the capital who will experience the very highest increases, facing fixed costs increases which could severely hinder their ability to trade.”

The government has set aside £3.4bn in transitional relief to help businesses affected by the revaluation, and it said that nearly of third of that total will go to London businesses over the next five years.

It also claims that, in real terms, business rate receipts will remain constant following the revaluation and that the review is an attempt to make the system fairer.

Local Government Minister Marcus Jones, said: “We are committed to helping all businesses flourish and as we make the system fairer up and down the country, nearly three quarters of companies will see no change, or even a fall, in their bills – including 600,000 who from next April will have their bills cut altogether.

“But for the small minority of businesses that do face an increase, we’re putting in place £3.4 billion of transitional relief to provide vital support as they adjust to these fair and impartial changes.”

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