this is really sad to hear, its hard to even comprehend such an increase.
Small Businesses Under Attack! Wild + Lees business rates up 700%
For the uninitiated (you don't know how lucky you are!), business rates are basically council tax for businesses. So, a shop or office will pay the local authority a monthly amount, calculated on the size and assumed value of their business space, in return for services provided by the local authority. There has always been controversy around business rates. For instance, large online retailers like Amazon pay very little as their properties are mostly large warehouses rather than them having a physical presence on the high street. Also, some services you might think would be covered by business rates aren't: Wild + Lees, for instance, has to pay separately for a private contractor to take away rubbish and recycling. It's not an entirely unreasoable system though. Small businesses are granted up to 100% discount from business rates, so that that a new independent shop is not burdened to the same degree as, say, a Sainsbury's Local. But what is a "small business" in this context? The business rates system defines it not by number of employees, turnover, profit, age etc but by the value of the property or properties which that business occupies.
Anyway, the controversy around business rates deepened massively earlier this year when the government announced that business premises were going to undergo "revaluation" for the first time since 2008. It was immediately obvious what this meant for high street shops - we were going to end up paying more. Ok, fair enough, bills go up. You can and should budget for reasonable increases in your costs. Once the revaluations started to happen though, it became clear that many high street businesses would face huge increases that could close them down. The main worry for a shop like Wild + Lees was that the revaluation would take our little shop under the railway bridge above the value where we would be deemed a small business. Business leaders petitioned Philip Hammond (Chancellor of the Exchequor) to adopt a more reasonable approach and he reacted by unveiling a few measures to appease the worried:
- Any firm which has lost small business relief due to the revaluation will have the increase in their tax bill capped at £50 per month or £600 a year.
- A £1,000 business rates discount this year for pubs with a rateable value of less than £100,000, which the chancellor said would cover 90% of Britain’s pubs.
- £300m over four years for local authorities to offer discretionary discounts to businesses in their area.
The first of these measures was a huge relief for Wild + Lees. A £50 a month increase we can handle. However, when we actually received our new business rates demand notice, it was up by over 700%, thousands of pounds in additional cost and way, way in excess of £50 per month. For a business less than 6 months old, this sort of increase is a nightmare.
Of course, we raised this anomaly with Southwark Council, who issue the demands and collect the money. The council acknowledged that Phillip Hammond had promised this £50 a month cap on increases for businesses in my situation but said that the government has given local authorities no guidance or funding to implement that, so they had no choice but to issue me this vastly inflated bill. Southwark describe the £50 promise as "possible" and "hypothetical", yet here it is in black and white on the government's tax website (see point 2) - https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-re...
The upshot is that Wild + Lees is now in arrears on business rates that have gone up more than 700% for us and that we know are wrong. We can point out as often as we like and to whoever we like that the bill ignores the government's own rules and is fundamentally incorrect but it makes not a jot of difference. We just get increasingly hostile demands from Southwark council. So, is central government dragging its heels on implementing a promise? Or was this a false promise designed to shut people up? Or are Southwark council failing to properly execute the relief associated with these changes? Who knows?! The only certainty is that Wild + Lees and other small businesses are taking a big hit and sleepless nights are becoming a regular occurence.
I'd rather be writing about wine and beer than business rates but this is a game-changing issue for us. Thanks for reading.
Wild + Lees
This is appalling - isn't there anything the community can do? Pressure on the council?
So sorry to hear the news
Sorry to hear this Liam - it's ridiculous. As above, please do post if there's anything we can do - I just can't see how it's justifiable.
Best of luck - we really love the shop.
Obviously its a business expense - some parts of Herne Hill have been paying pretty much nothing for years. On Milkwood Road we've been paying quite a high rate for a few years, there has been a reduction for new businesses via Lambeth Council, but it looks like we will now be paying around 3k a year - we have quite a big arch on Milkwood Road, so I expect us to pay significantly more than Wild and Lees or the barbers next door - does anyone know what they have been quoted?
Hi HH! Yes, happy to share. My annual rates bill went up to just over £7,100. I get "transitional relief" for the coming year, which takes the bill down to just over £3,500 and my assumption is that the £7,100 kicks in next year. The main difference (as far as I can make out) is that you guys are Lambeth and we are Southwark. All of the Lambeth per sqm values seem relatively reasonable (£150 for the Milkwood Rd arches like yours, £250 sqm for the building Pizza Express occupies, £500 sqm for Sainsburys), while the Southwark values are much higher. Half Moon Lane properties are all valued at £550sqm, so while our shop is smaller than your premises, it's rateable value is higher under this system (£15,250) and takes us over the threshold where we can apply for small business rates relief. So, I guess that makes Wild + Lees a big business! I'll have to remember to celebrate that at the next of our huge corporate board meetings! Maybe there is some logic, borough-wide to make it more expensive to do business in Southwark than Lambeth. However, when businesses are literally metres apart, such a difference in cost defies logic.
Is there anything the local councillors can do? Have you contacted them? This rate hike is appalling! Would be so sorry to lose your shop!