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Struggling firms face a business fees ‘bombshell’
Companies could be hit by 38% hike
BUSINESSES in the West End face a “tax bombshell” under the imminent change to business rates, the council has warned.
Finance chiefs say the predicted 38 per cent rise could affect any tentative steps towards economic recovery at a time when shops and restaurants need all the help they can get.
Currently, Westminster collects a whopping £1.2billion in rates every year – more than Birmingham and Manchester combined.
But under the pending five-year revaluations, which are calculated on relatively high rents in April last year, there will be a disproportionate impact on businesses, most critically firms employing less than four people.
The average bill is expected to rise by 38 per cent, generating just short of £500m for the Treasury and potentially crushing businesses which had hoped they had weathered the worst of the recession.
Councillor Brian Connell, cabinet member for economic development, said the forecast made “grim reading”.
“For central London businesses this will be a bitter pill to swallow following one of the toughest years in living memory,” he added.
“The government sets business rates and it has the power to change them. There is something fundamentally flawed about a system which is so heavily weighted against areas which invested to remain competitive, and also fails to take into account of the recession.”
Worst hit will be office space, with average revised rates expected to increase bills by 58 per cent. Hotels, bars, restaurants and retailers are all faced with significant rises.
Although business rates are collected by the council, they are set by central government using a complex formula. A percentage of the overall amount is then given back to the council.
Business leaders have criticised the hike. Richard Dickinson, chief executive of the New West End Company, which represents businesses in the West End, said: “The scale of these increases is chilling. Businesses will have no choice other than to cut costs even further than they have already.
“Given the West End’s vital contribution to the wider economy, both in London and nationally, this will impact everybody. It’s not just a local issue.” |
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