Procurement 4 September 2020
The business rates loopholes your small company should know
Business rates could be the difference between your small firm remaining operational in the years ahead, so we asked some experts and company owners whether there are any business rates loopholes worth knowing about. As of 1 April 2017, the government has revalued every commercial premises in the UK, and every business owner should be able to work out a new rateable value based on their premises? rental value from April 2015. The revaluation was delayed by two years, meaning that the 2017 incoming business rates will reflect seven years of property price hikes in Britain a fact that will increase fixed costs and put the future of thousands of small UK businesses at risk. Certain owners will avoid the worst of any damage caused by the revaluation because of the type of small company they operate. So-called rural? businesses those in an area with a local population of less than 3, 000 will benefit from full rate exemption, while most UK pub owners will receive a 1, 000 revaluation discount. The smallest, most vulnerable firms will also receive a certain amount of government protection. Commercial properties with a rateable value of under 12, 000 are exempt from paying business rates altogether, for example. Meanwhile, the small business multiplier? threshold the amount owners must multiply their property’s rateable value by to work out their business rate liability has been extended to any venture with premises valued at 51, 000 or less. In his 2017 Spring Budget announcement, the chancellor Philip Hammond set aside a 110m fund to help the many small business owners due to emerge from business rate relief for the first time, and a 300m fund was earmarked for local UK authorities devolving power to set business rate relief away from Whitehall. But, if your firm wasn’t able to benefit from government-backed business rates loopholes, what could owners do to circumvent the business rates rise in ways that are lawful and cost-effective? One answer could be to move your venture into a co-working space, where the costs involved with renting premises are divided up between tenant businesses, and the property itself is managed by a third party. This was the case for Lucy Hutchings Hunt, founder and managing director at York-based web design agency Systemized. She chose to grow her startup by renting desks in a co-working space near the city’s centre, thereby sharing the burden of costs associated with running an office. She told Business Advice: As part of a collective we can all work in a really cool space in the centre of town and be part of a larger commercial environment, without having to shoulder the costs usually associated with doing so. business rates are a real prohibitor for smaller companies which want to expand the workforce and add more desk space, because they are such a commitment. Here’s how company owners would change small business rates given half a chance. it’s often in the interests of co-working space operators not to inflate the cost of their memberships, or charge extortionate prices for desk space, even when faced with potentially huge overhead cost increases. Co-working spaces may therefore offer the best option for small business owners looking to circumvent the business rates rise. Founder and director at London-based co-working space managing agency The Brew, Andrew Clough, told Business Advice that remaining the most cost-effective option for startups was his primary objective. He said: We can either increase our membership prices, increase the density of our members in the space, or look to create supplementary income on top of what we offer.