Source: The Times – Catherine Boyle

Companies are facing rises of up to 25 per cent in business rates after a revaluation of commercial properties rewarded small businesses at the expense of large retailers. Supermarkets are likely to face an average 12 per cent rise in business rate bills, said the British Retail Consortium (BRC).

Businesses in London will be particularly heavily burdened by the new rates regime, which will start next year, as they are based on commercial rents in April 2008, when the property rental market was near its peak. They will also be subject to a Crossrail levy of an extra 2 per cent if the property they rent has a rateable value of £50,000 or more in the new valuations.

A typical large West End hotel pays about £900,000 in business rates annually at the moment, while a medium-sized office off the Marylebone Road pays about £14,000. The Government has capped the amount that rates can rise on a large building between 2010 and 2014 to 25 per cent, while tenants of small buildings could see rates rise by 15 per cent in the same period.

Brian Connell, cabinet member for economic development at Westminster Council, said: “The figures make grim reading and confirm our worst fears. For Central London businesses this will be a bitter pill to swallow after one of the toughest years in memory.”

The Government is to reserve £2 billion from the total business rates bill of £23.44 billion to give rebates to struggling businesses and about 60 per cent of them will see their rates bill fall next year. The Federation of Small Businesses welcomed the rates cuts. John Wright, chairman of the FSB, said: “The formula for working out the rates has left areas where property prices have remained high, such as London, with the likelihood of an increased bill.”

But Tom Ironside, the BRC director of Business Environment, said: “In some of the toughest trading conditions in years, a scheme that regards a 12 per cent hike in retailers’ rates bills as OK is not doing its job. Retailers need to be cushioned from the worst effects of revaluation on their rates bills.”