Liverpool, UK (July 2013) – The Federation of Small Businesses has expressed its outrage that some businesses are now paying more in rates than in rent.
Rates and rent are two of the major costs faced by all businesses, and in many cases the two stand opposed to one another; owned property that stands empty can still be subject to business rates, while rented office space does not represent so much of a capital investment.
With many small businesses looking to flexi office space as a way of gaining the workspace they need at an affordable cost, rates have now become more expensive than rents for many firms – a situation the FSB says is unacceptable1.
According to a recent FSB survey, 7% of small businesses – roughly one in every 14 – now pay more in rates than rent, while 6% more say their rent and rates cost roughly the same as one another.
FSB national chairman John Allan says: “The current rating system is a blunt tool for maintaining the government’s income even when everyone else’s is shrinking. It takes no account of ability to pay, or changes to economic conditions.”
Although business rates are officially based on rents, they are only reviewed once every five years – put into context, that represents the entire period from the first signs of economic turbulence and the ‘credit crunch’ until present day.
Revisions to business rates are also linked to RPI inflation, rather than CPI inflation, the latter of which is typically the lower rate of the two.
Coping with business rates
Small businesses and those in rural areas may qualify for business rates relief, helping to reduce the amount that they have to pay.
For other firms, it’s a case of trying to manage the budget and save funds from elsewhere if necessary; serviced office space is one way to do this, and can give you the workspace you need, without you having to cover the full capital costs of buying business premises of your own.
1Business rates need radical overhaul, says FSB
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