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Massive Rises In Business Rates ...

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This is only going to have one effect on commercial property values ....

CITY firms are bracing themselves for a crippling increase in business rates after new valuations for their premises were released yesterday.

The tax hikes led to fury after it emerged that the majority of businesses will see increases of between 25 and 40 per cent.

From April next year, the new business rates will be based on rental values calculated between April 2003 and April 2008.

During this five-year period, rents in the City and the West End were booming, meaning that firms will now have to pay inflated business rates on property which has since slumped in value.

Industry observers have argued that the government’s decision to base the rates on rental values from before the slump will leave businesses struggling.

London Councils’ chairman councillor Merrick Cockell said: “Forcing London’s businesses to pay rates based on pre-recession values is short-sighted.

“The capital has already borne the brunt of the recession and introducing inflated rates at this time will really hamper their recovery.”

Estate agent Cluttons said: “The business rates burden for some office occupiers is set to rise by up to 160 per cent in 2010.”

Liz Peace, chief executive of the British Property Federation, added: “With this revaluation taking effect in such challenging economic times, government must be open about the impact for individual businesses.

She added: “And it should support both those who would see big increases in rates bills and those whose property values have performed badly.”

The retail sector will be hit the hardest by the changes with prime sites on Oxford Street facing rises of £112,000 on top of current annual bills of £499,550. By 2015, the total bill for these retailers will be over £820,000 a year.

Tom Ironside, director of the British Retail Consortium said: “Property is one of retailers’ biggest costs. They are left paying a quarter of all business rates despite making up eight per cent of GDP”.

During the downturn struggling retailers have already had to ask landlords to accept monthly rental payments instead of quarterly ones.

Ironside added: “Retailers need to be cushioned from the worst effects of revaluation on their business rates bills.”

Meanwhile, Mark Henderson, head of DTZ statutory valuations, said: “For businesses struggling in the current market, this is going to be a particularly difficult burden to bear.”

Confusion among businesses was compounded yesterday, after a flurry of firms tried to access the government’s website on business rates, causing it to crash.

The Department for Communities and Local Government is proposing a £2bn relief scheme to help struggling firms to cope with the rise in business rates.

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But during the boom, were the rates based on pre-boom levels????

I don't know because I never heard anyone complaining then.

You obviously don't know a lot about the cost of business rates for the average business.

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Yes and it won't be long before all out council taxes go up by double digits no matter who wins the next election as someone has to pay for all the banksters bailouts and MP perks and kick backs.

The stick don't hurt and the carrot tastes $hite.

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Well perhaps you may enlightened me oh wise one.

Its alot .....but then again its not the business that pays them , they just jack up their prices to cover this overhead so ineffect the customers pay for the increases....

Deflation yeah right....

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Its alot .....but then again its not the business that pays them , they just jack up their prices to cover this overhead so ineffect the customers pay for the increases....

Deflation yeah right....

Then the customers can't/won't pay for the product at that price. Then the business loses sales. Then it becomes insolvent. Then it closes down.

Just a few more redundant employees in the dole queue then, oh well.

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Then the customers can't/won't pay for the product at that price. Then the business loses sales. Then it becomes insolvent. Then it closes down.

Just a few more redundant employees in the dole queue then, oh well.

I suspect an incoming tory govt would reverse this quick-sharp in an emergency budget to promote enterprise

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This will only lead to a greater exodus from the capital.

...which will be a good thing...

Poor parts of the country have long subsidised the rich centres.

Simple reform of Business Rates: Take look at viable businesses on most marginal sites in UK. Note rent for site and add business rates. Call this "marginal economic rent". Look at similar sites in all other parts of country. Subtract "marginal rent" from actual rental + actual business rates for each site and add this to existing business rates to work out what the fair business rate should be.

Add all new business rates and subtract off VAT, income tax, inheritance tax etc to make zero additional tax - just shift from unfair tax target to fair tax target.

And yes it means City rates go up by 100s% if not 1000s%. Where do you think those bonuses come from after all...

Doh!

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Then the customers can't/won't pay for the product at that price. Then the business loses sales. Then it becomes insolvent. Then it closes down.

Just a few more redundant employees in the dole queue then, oh well.

True but then the government and its advisers are not economists or know much about economic theory (even the really basic stuff) , as exampled by the jacking up of taxes on Scottish Whiskey , the demand/price curve meant that price increases would curtail demand so they got less revenue as a result...

Its like the first class in economics I did when we were given a case study about a factory which is losing X amount of money , the initial solution everybody thought of was to raise prices, but this reduced demand and made the losses even bigger. (The solution was actually to do nothing as it was making a loss but minimising them as if it closed down it would make an even bigger loss).

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...which will be a good thing...

Poor parts of the country have long subsidised the rich centres.

Simple reform of Business Rates: Take look at viable businesses on most marginal sites in UK. Note rent for site and add business rates. Call this "marginal economic rent". Look at similar sites in all other parts of country. Subtract "marginal rent" from actual rental + actual business rates for each site and add this to existing business rates to work out what the fair business rate should be.

Add all new business rates and subtract off VAT, income tax, inheritance tax etc to make zero additional tax - just shift from unfair tax target to fair tax target.

And yes it means City rates go up by 100s% if not 1000s%. Where do you think those bonuses come from after all...

Doh!

Yes, and of course the timing is impeccable. Will there be any shine left on London? It maybe has an entertainment/tourism draw, but as a viable base for business probably not.

Edited by PopGun

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Blowback for years of ramping properdee. If you don't want the high bills don't use first use of newly printed money to inflate your own cost base.

If you can't handle the end result ****** off and go out of business.

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Yes, and of course the timing is impeccable. Will there be any shine left on London? It maybe has an entertainment/tourism draw, but as a viable base for business probably not.

Entertainment? ! , its not exactly value for money , I remember foolishly taking a girl out in Picadilly circus and down the road to China town where I took her to a cinema , I was shocked at the cost of the cinema tickets ......... but then I did get a shag out of taking her out that night though :D

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There has been a massive increase in business taxation over the past few years, this is just another example of it.

Government has been passing social costs away from the taxpayer and onto business. For example maternity and paternity pay. Now if a governement want to pay maternity and paternity pay fine, it is an elected government that is their choice. But don't pass social benefits legislation and then make businesses pay for it.

The result of that will be discrimination against the very people they are truing to support..

Business rates are about 46% of the rental value of the business premises. A modest office in a provincial town is going to costs at least £10k leading to a rates charge of £4600 per year. Quite a lot of money for what is in most cases zero services supplied. Again we have decided as a country that we want all the services that councils provide and then made businesses pay fot it.

Trouble is that the more we tax business the more vulnerable they are to a downturn, the less they are able to invest and the less they are able to employ people.

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Once Labour are done destroying the City of London, what exactly will we be left with in Britain?

Oh easy one. The amazing inventive nature of our culture. No worries. Kill the parasite top-slicing YOUR reward for YOUR efforts and there will be a renaissance of British innovative industry in manufacturing, media, services, IT, arts.

Right now why bother. You pay the 4rsehole in the bank for the privalege of finance, and the 4rsehole landlord for the scummy space to work, the dead weight of the state to fund all the non-jobs. Then you get to work for yourself.

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In reality this is a very big hike for Hedge Funds, multinationals and government buildings in Mayfair and St James and other parts of prime central London - helping to finance cuts in bills in most of the rest of the country (particularly retail and manufacturing in the north).

So the changes will help those who need it by making those who are in a better position to afford it pay more. That's how revaluation works - the government legally is not allowed to collect more rates each year in real terms by law.

Will be painful for the West End - but is good politics!

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Entertainment? ! , its not exactly value for money , I remember foolishly taking a girl out in Picadilly circus and down the road to China town where I took her to a cinema , I was shocked at the cost of the cinema tickets ......... but then I did get a shag out of taking her out that night though :D

Act like a tourist in your own country pay like a tourist sort of fair isn't it?

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