At least one small business owner a week faces jail for failing to pay the correct business rates, according to new figures by business rent and rate service CVS.
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Courts across England and Wales handed out 54 sentences over the last 12 months, up four per cent from the previous year.
Self-employed face up to 90 days in jail
For those who don’t or aren’t able to pay, the sentence can be up to 90 days in jail.
This is bad news for business owners across the UK, after the controversial re-evaluation of rates this April has left many struggling to pay.
Pressure on sole traders
The hike in business rates earlier this year has had the most impact on sole traders.
For businesses that have incorporated into a limited company structure, the result of not paying is the company going into administration, where as sole traders can find themselves imprisoned.
CVS CEO Mark Rigby said: “It is the only tax not related to the ability to pay, so it places both a disproportionate financial and legal burden on sole traders.”
Wondering whether incorporating is right for you? Read our guide on the differences between a sole trader and a limited company to find out more.
Do you need to worry?
If you own or rent a property that you use for your business, you’re likely to have to pay business rates. Even if you work out of your home, you may be required to pay for the part of the property that is used for commercial purposes, and you’ll still need to pay council tax on the rest of the property.
If you’re unsure whether you need to be paying business rates, check out the government guidelines or contact your Valuation Office Agency.
You may also be eligible for small business rate relief, though this is set to change over the next few years.
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.