Taxation: it’s not the sexiest of subjects, but an imminent hike in business rates poses a serious threat to the independent traders that make London special.
From April 1, thousands of London businesses will have their rates raised sharply because London property prices have increased so much since the last evaluation. For some, it’ll be a struggle to stay afloat. Here’s what’s happening, and what could be at risk.
What are business rates?
A tax paid by businesses to fund local authorities. Instead of turnover or profit, they’re based on the value of the property a business trades from.
How much are they going up by?
It varies by area, but rates in Hackney (for example) could rise by anything from £10,000 to £100,000 per year.
How could this affect my favourite local places?
‘Forget your little shops, start-ups and family-owned cafés – even bookshops. This is species wipeout,’ wrote the author Jeanette Winterson in Time Out last month. Massive rises in business rates could cripple independent businesses like her shop Verde & Co. It’s a similar case for the indie jewellery makers Tatty Devine, who told Enterprise Nation that their rateable value had jumped by almost £20,000 overnight. Meanwhile the Daunt Books mini-chain was preparing for a rise of £50,000 a year: ‘This will have a huge impact and businesses can’t sustain it,’ a spokesman said. ‘We are trapped.’
Big chains and neighbourhood restaurants alike are facing a killer combination of rent rises and rates hikes. It’ll be that much harder for London’s food dreamers to jump from street stall to permanent site.
The West End could get even more expensive, as the bigger theatres pass on the costs of rate rises to ticket buyers, but it’ll survive. Less sure is the future of London’s fringe theatre scene. Pub theatres and other small venues will have to pay hugely inflated amounts, and might have to pass on costs to theatre companies or else go out of business. ‘It’s a game-changing rise for small venues like ours,’ said Clive Judd of the Old Red Lion theatre in Islington.
Pubs and music venues
Last week’s Budget included a £1,000 rates discount for some pubs, but it won’t cover hundreds of other boozers and live music venues facing the biggest rises. Stacey Thomas, who runs The Lexington pub and venue in Islington, called the Budget discount ‘peanuts’. Her pub’s rateable value has been hiked so much that the discount doesn’t apply, and her annual bill could rise by as much as £70,000. ‘We can’t claim anything,’ she told me. ‘And even if we could, what’s £1,000? It’s not going to help us stay open.’