property – this is set by the Valuation Office Agency , and increases each year in line with inflation , taking into account the size of the property and its usage .
Today ’ s rates are calculated from April 2015 , as they are revalued in five-year cycles . Many businesses are unhappy because 2015 rent settlements - on which the new rates were calculated - were a particularly high period for rental values . A historic level of rent is used to assess the rateable value , which means there is a disconnect between the current rent levels and the levels used to assess the rates . Business rates bills have continued to rise when property values have fallen .
Why is this an issue now ?
The changes to business rates are the largest for London for over a decade , and the brunt of the nationwide increases will be borne by London-based businesses , leading to suggestions that the Capital is propping up the tax for the rest of the country .
Firms in the Midlands and the north are largely unaffected or will see even see a reduction . Businesses based in central London especially will suffer sharp rises , with Dover Street in Mayfair estimated to see an astonishing 415 % increase in tax . The average increase in the West End is likely to be 55 %.
Restaurants are particularly perturbed by these rises as they are unexpected and unplanned for , coming on top of the expanded costs they saw post-Brexit , with raw materials and food prices becoming more expensive , as well as the recent increases to the national minimum wage .
What effect has this had ?
Jamie Oliver has already announced that he is to close six Jamie ’ s Italian restaurants , with others likely to follow . The owners of restaurants such as Pied a Terre , The Ivy ( above ) and Sexy Fish have also all voiced concern over the rises . However , it is not just high-end outlets that are affected . Although they have bigger labour costs , high-end restaurants also have wider profit margins , and should be able to wear these increases .