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SMEs Face Double Rate Threat

SME newsThe Government’s pro business reputation and rhetoric is under pressure as small businesses face up to the new reality of business rates.

Two policies are converging to cause new headaches for SMEs, firstly April 2015 will see the end of transitional relief for small businesses and secondly comes the postponement of a revaluation of the property values (following a decline in commercial property values) that are used to calculate the tax.

Transitional relief was introduced after the last property revaluation in 2010, which in itself was based on 2008’s ‘pre-credit crunch’ property values.

The intention, recognising the boom time in property values and the related impact on rateable values, was to ensure big increases to the rates bills for small companies were smoothed out throughout the following five year period to the now postponed 2015 revaluation.

As a result, with no 2015 revaluation downwards from 2008 levels and the ending of the transitional relief, businesses will be hit with the full force of rateable values for at least 2 years – the period for which the government has currently announced a postponement.

Jerry Schurder, head of rating at Gerald Eve who have investigated the likely cost impact of the two measures, said:

“The government brought in the relief because they understood that small businesses could not deal with big shocks. Now government policy will impose a double-whammy. Not only will they not benefit from the adjustment that a revaluation would have brought by aligning values with the market, but they will also face inflation-busting increases in their bills.”

A troubling time for SMEs and the government ahead of a crucial 2015 general election.

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