In today’s Autumn Statement, the Chancellor has bid to cap business rates to 2% instead of the expected 3.2% (linked to RPI inflation). George Osborne admitted ‘business rates are too high’ and has also revealed plans to extend a rate relief scheme for small businesses until April 2015. Our previous blog asked whether rates would be frozen, in order to re-evaluate the current outdated system that, in some cases, ends up charging higher business rates than the rent itself.
Unfortunately, Osborne made no such promise to address this issue which many industry officials, including Business Secretary, Vince Cable, have tried to raise. Because of the system in place, high business rates have overtaken rent costs for retailers in particular, leaving them only just holding on.
How will the cap on business rates affect your business? If you’re a high street retailer, a cap on rates is certainly better than nothing, however, it’s still very clear that the system is not working very well and needs to be updated to reflect the appropriate rate charges against rent. Good news for some small businesses though as they can take advantage of the rate relief scheme until 2015.
Did you know that a CVA can allow you to vacate premises even if you have rent arrears? Rates can also be bound in the CVA. See our page on retailer rescue for more information: