As April’s business rates rise looms, new Simply Business 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 425,000 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 (see table).
|City||Projected rates rise (%)||Businesses with turnover <£50k (%)||Businesses with turnover >£50k (%)|
Cambridge and Croydon – in third and fourth place facing rates rises of 57 per cent and 50 per cent respectively – have a far higher proportion of thriving businesses, thanks to initiatives like the Croydon Partnership and the Cambridge Business Improvement District, attracting more growing businesses to the area and providing ways for small businesses to save running costs. Businesses in Milton Keynes voted in favour of a proposed Business Improvement District on Friday 3 March, 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.”
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Notes for Editors:
Simply Business compared data from RFQs (online requests for quotes on the cost of a new insurance policy) with data compiled by commercial property specialists JLL.
Earlier this year, a report by JLL detailed the estimated average business rates rises in towns and cities across the UK. Simply Business compared these figures with sales turnover data collected from over 10,000 businesses across the UK who applied for a quote on insurance cover in 2015-16. The figure includes businesses that qualify for business rates such as shops, restaurants, bars and pubs, and excludes businesses that have no premises and no rateable value.
Nithiya Gnanathas / Sean Canty
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About Simply Business
Launched in 2005, Simply Business provides an online brokerage service delivering policies tailored to individual business requirements. It has a team of UK based insurance specialists and employs almost 300 people across offices in London and Northampton.
Simply Business provides insurance to more than 425,000 UK SMEs and landlords and owing to its internal underwriting capability can cover over 1,000 trade types. It has been a Sunday Times Tech Track 100 company for the past three years and was recently named in the Deloitte Technology Fast 500 EMEA. Revenues have grown from £4.2 million in 2006, to £25.4 million in 2014, and the company has been named 2015 and 2016 winners of The Sunday Times’ Best Company to Work For.