Firms forced to foot the bill as Philip Hammond’s Budget policy for business rates relief has not begun
- Credit: Archant
Firms which were promised support with spiralling business rates in the Budget are having to cough up for the full bill.
Chancellor Philip Hammond said no company would have to pay more than £50 extra per month in the first year of the changes to the tax, which saw reevaluation of rates at the start of April with some seeing a ten-fold rise.
However, firms have revealed they are paying the full amount of business rates with local councils in the process of deciding how to distribute the discretionary relief announced in March.
Companies are warning the rising costs are putting pressure on margins in an already challenging period.
But with local authorities still to decide how to distribute the discretionary relief, many small businesses are still having to pay the bills they thought they had escaped.
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At the Foundry Arms in Northrepps near Cromer, landlord Jason Bumphrey is paying a monthly bill of £340 – just £10 less than he paid for the previous year.
The increase is equivalent to 1,300%, exacerbated by the pub no longer qualifying for small business rate relief.
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'It is a bit of a nightmare for us at the moment. It is something we can sustain but margins are tight in this industry as it is,' he said.
Mr Bumphrey said he had heard of other businesses which were planning to close due to rates hikes.
He added: 'It is not so much this year I am worried about but the year after that and the year after that. The relief will get phased out so then we will be left with a big bill.'
Norfolk is to receive a discretionary relief pot of just under £4.5m while Suffolk will get £3.2m and Essex £1.5m.
Guy Gowing, managing partner at Norwich estate agents Arnolds Keys said it was time for the business rates system to be reviewed.
He said: 'The way business rates are done needs a root and branch review.
'If you are paying too much for your business rates at the moment it will eventually come out in the wash but that doesn't help small businesses that have a cash flow and need to keep going.
'[The discretionary relief] was done with the best of intentions by the chancellor but businesses are the ones which have got to feel the impact and they haven't so far.
'Local authorities aren't set up to deal with quick changes like this.'
Concerns have been raised that central government has not given advice to authorities to make sure relief funding had been distributed quickly.
The Local Government Association has said local councils have now received guidance and are in the process of working to support small businesses in their area.
A spokesman for the Department for Communities and Local Government said it had allocated the funding for each council after a consultation and it was now in their hands.
He said: 'It is now for councils to finalise the details of these schemes in their areas before implementing them once they are agreed locally.
'We have also published guidance on the additional relief available to support small businesses and have encouraged local authorities to inform businesses that are eligible as soon as possible.'
Business rates experts CVS said across the UK the smallest of firms are facing tax hikes in rates of £45.85m – an average increase of £1,835 per property. This equates to some 62% more tax payable than in 2016/17.
CVS chief executive Mark Rigby said: 'The money to help those most in need is coming from government and there is no reason why revised tax demands shouldn't have been sent out by local councils by now.
'These delays are simply causing panic, confusion and alarm for small firms.'