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  1. ITV Report

New rates will be 'kick in the teeth' to small business

The Richmond Arms in West Ashling, Sussex Credit: Google Maps
  • By Karen Morrison: ITV News

The new business rates are a "kick in the teeth" and will "cripple" start-ups, small business owners have told ITV News.

William Jack, who runs the Richmond Arms in rural Sussex, said it will be a "hell of a lot of money for us to find" in April, when business premises will be revalued for the first time in seven years.

The landlord "took a massive risk" buying the derelict pub with his wife Emma six years ago and says now, since carrying out complete renovations, his rates are expected to rise from £8,500 to £38,000 per year.

He told ITV News: "We are tiny rural business. We worked hard - really hard, to get it where it is.

"We heard before Christmas the new rates were being pushed in quietly.

"It was a massive risk taking on this business. We're only basic rate tax payers - we're not rolling in it at all.

"It will be a hell of a lot of money for us to find. It's incredible - I don't know where they find the figures from. And we still have a large mortgage on the place so we have to carry on."

In any area where property values have increased, businesses will pay more tax. The business rates review is supposed to make the system fairer, according to the government.

The front window of Bryars and Bryars Credit: Pinda Bryars

Pinda Bryars, who owns antiquarian bookshop Bryars and Bryars in Central London, believes it is unfair that rates are based on the property's value.

The calculation does not take into account the success of the business, nor how well established the firm is.

She said: "Working on Cecil Court we hear a lot of passing chatter from people mourning the large-scale loss of shops like ours.

"Usually they think it’s down to the internet - it’s not the internet. We sell online too, as do the majority of our colleagues.

"The demise of small business premises is down to successive governments, Labour and Tory, using us as a cash cow to milk until we’re dead.

"Londoners are asking for business rates to be calculated fairly and not on a lunatic metric that assumes the value of the premises you rent is somehow magically transformed into profit."

Entrepreneur James Layfield says new rates could 'cripple' new business Credit: ITV News

Entrepreneur James Layfield 42, founder of Central Working, says the new rates could "cripple a fledgling business".

Mr Layfield, who rents space to small start-up companies including the successful Headspace app, said: "Fundamentally they are a stealth tax which is very cloudy. Hence, there is a whole industry of lawyers and surveyors who spend their lives disputing them and wasting client and tax payers money.

"There should be a window of time in which businesses do not pay.

"For example, for the first three years of a new business so that they can find their feet and spend this money on team and IP development.

"And to make it truly fair it should be based on the actual rent being paid. So if you are able to negotiate a good deal on your rent, then the rates should be in line with this, not based on a theoretical rent achieved up the road in a completely different building."

Neil Chatterton, of Caxtons in Kent Credit: PA

But it is not all doom and gloom.

Chartered surveyors Caxtons, who have offices in Dartford and Maidstone, Kent, say the new rates will not affect business too much.

Managing Director Neil Chatterton said: "The differences are fairly small in our particular case and there isn't going to be a significant impact but there will be winners and losers."

He added that the business rates were "flawed" but that it was "not necessarily easy to come up with another option".