Almost one-fifth of small businesses – including retailers – would consider closing down as a result of the looming business rates revaluation, according to a new survey.
Research from the Federation of Small Businesses (FSB) suggests that 36 per cent of small businesses expect to see their rates increase, with 44 per cent expecting bills to eventually rise by more than £1000 a year.
Meanwhile, 21 per cent expect to see their bill increase by more than 40 per cent.
Of the businesses expecting a rise in rates, 54 per cent expect profits to drop and 38 per cent said they will increase prices to make up for the loss.
READ MORE: Help for retailers affected by business rates rises to be in Budget
As a result, 55 per cent of those facing business rates increases plan to reduce, postpone or cancel investment. The FSB said this could have an adverse impact on UK productivity and growth.
However, 19 per cent of small businesses consider closing their firm down thanks to rates rises, according to the survey.
“The business rates system is an unfair, regressive tax which hits small firms before they’ve had the chance to make their first £1 in turnover, let alone profit,” FSB national chairman Mike Cherry said.
“The major win at the latest Budget to exclude 600,000 small firms from the business rates system remains hugely important.
“However, our survey shows the delayed revaluation harms too many small businesses who face unsustainable and unaffordable rises.”
READ MORE: “Appropriate relief” for retailers hard-hit by business rates: Theresa May
Cherry added that the anxiety being felt among the small business community should worry policymakers.
“Profitability across the UK small business community is already falling,” he said.
“The costs of doing business for small firms are now at their highest levels since early 2014.
“The last thing we need is a business rates burden so heavy that it threatens the future growth prospects of our entrepreneurs.”
READ MORE: Sadiq Khan: Business rates reforms place “our local high streets under threat”
After weeks of intense pressure from business groups and leaders, the media and MPs, Communities Secretary Sajid Javid last week announced extra help for small firms facing increases that will be announced in the Budget on March 8.
The government has already put in place a £3.6 billion transitional fund to help businesses facing sharp increases when the business rates are updated for the first time since 2010 in April.
The FSB survey comes as it prepares to join a roundtable hosted by the Labour Party to discuss the issue today.
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