Milton Keynes second hardest hit by business rates rise and also one of the shortest on cash
New analysis of the impact of rates revaluation underlines case for radical changes to the way business rates are calculated.
As April’s business rates rise looms, new analysis finds that small businesses in the hardest-hit areas also have the least cash to spare for the tax-collector.
Small businesses in Milton Keynes and Reading will see business rates rise well above any increase in their sales in recent years, according to new data from business insurance broker Simply Business.
Reading and Milton Keynes will see business rates rise by 70 per cent and 60 per cent respectively, increases well above any seen outside of London.
Simply Business is the UK’s largest business insurance broker, with over 400,000 customers nationwide, and specialises in microbusinesses and SMEs.
Its database reveals that the proportion of premises-based businesses – including shops, restaurants, pubs, bars and clubs – within higher sales turnover brackets was smaller in those two towns than in any UK city earmarked for large hikes in business rates.
Businesses in Milton Keynes voted in favour of a proposed Business Improvement District on March 3, unlocking £6 million in investment for the city centre.
However, the evidence still raises questions about the way in which the government calculates the sums small businesses pay in tax.
Fiona McSwein, Chief Customer Officer at Simply Business, said: “In expensive areas, we would expect small businesses to have higher costs of business and higher turnover but the property price rises in some areas are a result of speculation rather than successful business growth.
“In Milton Keynes and Reading, small businesses have not yet felt the benefit of property developments, higher customer footfall, higher spending and greater earnings. They are still waiting for those benefits to come.
“With the rise in business rates, the cost of doing business should rise roughly in line with the increase in sales, as it does in Cambridge and Croydon.
“Instead, the growth in some areas of the country will face a huge setback. To base tax on property value rather than business turnover or profit is unfair.”