Business rates explained by Andrew Jacobs ( below ), Head of the Real Estate Department at Seddons
The hospitality sector , and restauranteurs in particular , are deeply concerned about the impending rise in business rates – due to increase by an average of one-fifth from April this year . London restaurants will collectively pay an additional £ 42.7m in 2017-18 , according to research from business rates firm CVS . This has created resentment in the competitive restaurant industry in London , and is likely to mean higher prices on menus , with particular pressure felt by independent outlets .
All businesses with properties that have a so-called rateable value above £ 12,000 have to pay business rates . The last time rates were set was seven years ago , but property price changes since then have led to big winners and losers . Rates will fall for 920,000 businesses , remain the same for another 420,000 , and increase for 510,000 .
A spokesman for the Department for Communities and Local Government said : “ The great British pub is a national asset , providing thousands of jobs and boosting the economy by £ 21 billion a year . The method of valuing pubs was agreed by the five major trade bodies and has not changed .
What are business rates ?
First introduced in 1990 , business rates are a national tax on the occupation of a non-domestic property , such as shops , offices , pubs , restaurants , and warehouses . They are a major part of the government ’ s tax revenue , amounting to £ 26bn per year . Business rate valuations are based on rental values , which is determined by the ‘ rateable value ’ of a
“ Following the revaluation , three quarters of properties will see no change or even a fall in their bills , and the small minority of businesses that face an increase will benefit from our £ 3.6 billion transitional relief scheme .”
The chains that have written to Mr Hammond say : “ We would urge you to consider reviewing the transitional relief provisions and the introduction of sectorspecific hospitality retail relief to help businesses plan and invest with confidence .”