There’s no two ways about it: running a small trade business is hard work. Whether you’re a builder, electrician, plumber or joiner, plying your actual trade is only half the battle. After that, there’s marketing, accounts, and – for those of you with your own premises – the not-so-small matter of business rates to contend with. With so much going on, those business rates can be easily overlooked. Yet as scores of small businesses found out last year, doing so could land you in some seriously hot water.
In 2017, almost 200,000 businesses received a court summons relating to unpaid business rates. That number, gained through a Freedom of Information request carried out by consultancy firm Altus Group, accounts for 15% of all businesses in commercial properties.
Changing rates hit cities hardest
Following a reevaluation of business rates in 2017 (the first such change since 2008), many business owners saw their rates significantly increase. The biggest blow came to business owners in major cities, with tradesmen in and around London the hardest hit.
According to a City AM report published at the time, only one of the 15 worst-hit areas was based outside London. Meanwhile, the likes of Reading and Milton Keynes saw the biggest increases outside of the capital, with Croydon and Cambridge not far behind.
What caused the huge hike?
A two-year delay in the business rates reevaluation has been blamed for the major rise in 2017, though a further increase did occur earlier this year. This time, the three per cent rise – which occurred in April – was down to inflation.
Good news further north
Whilst those in the south were dealt a particularly heavy blow by the business rates changes, for those based further north, the changes actually came as a relief.
Tradesmen with a commercial property in Newport, South Wales, for example, saw rates cut by as much as 70%. Elsewhere, those in Liverpool enjoyed a 25% reduction, whilst Leeds and Birmingham tradesmen saw a 5% cut to the rates they paid on commercial properties.
What happens now?
Up in arms about the huge increases in many areas, business areas bandied together and lobbied the government to do something about it.
The government did, but not by lowering rates. Instead, they announced that business rate evaluations will take place much more frequently. The next one is set to occur in 2021, and then every three years thereafter.
In the meantime, if having a commercial property really is vital to the success of your trade business, consider looking at areas outside of major city centres for your base of operations, as rates are likely to be much lower there.
Finally, it goes without saying that no matter how busy things get, be sure to keep on top of paying those business rates if you want to avoid being one of the 200,000 small business owners receiving a magistrates summons for non-payment.
How have the business rate increases affected you? Are you paying more or less than you were before the 2017 changes? Let us know in the comments below or join in the discussion on Facebook or Twitter.