A business rate is a tax on business properties so that those who occupy non-domestic property can contribute towards the expense of local services. The revaluation of business rates will become effective on April 1st after it was deferred from 2015 as to not interfere with the general election. Looking at London specifically, the increases mean that those businesses, such as independent cafes and retailers inside Central London could be persuaded and forced to move their business or parts of their business, such as a head office, outside of London. As they now have to deal with salaries, rent and an increased business rates as well as other business expenses.
By using a virtual office the services that Hold Everything can offer will allow you a great presence and NO business rate charge.
The LCCI ComRes survey found that:
- 17% of firms would move activities outside of London,
- 18% of firms would reduce staff numbers,
- 22% would reduce recruitment and
- 27% would reduce capital investment.
Additionally, within the construction and property trade 35% agreed that the new business rates will mean paying more in business rates than rent.
This providing evidence for the fact that depending on what trade one works in will depend on how much the business rates will affect their business. Many well-known corporations based in London which will be greatly affected, organisations with large premises or multiple locations such as TGI Fridays, Harrods, Selfridges, St Pancras Station could be affected whilst and The O2 Arena it is reported will suffer from a 142% rise in business rates.
Taking restaurants as an example, this increase will mean that the big chains, such as the well know pizza companies and American style burger restaurants will have to serve millions more meals and thus collect millions more checks to cover the cost of the business rate without increasing their prices to the consumers. Now because such a high demand is unreasonable to create especially in this unstable economy, the only solution is to unfortunately for the consumer to increase the prices of the products sold and unfortunately for the employee to reduce recruitment and decrease the staff numbers. In addition, for the small independent businesses that are still trying to overcome the increasing rent will be forced to close or mover to cheaper locations outside of central London.
The Federation of Small Businesses explained that London is in “serious danger of losing its vital support system of micro and small businesses”, which arguably brings life to London.
Therefore, the rising prices of business rates which in turn creates products being sold for larger amounts results in less consumer spending, meaning that the government still needs money to cover their costs so will increase taxes elsewhere, thus resulting in more business closure and relocation. This vicious circle could be detrimental to London’s economy.
One solution to this issue of increasing rent and business rates is using and taking advantage of a virtual office. Why risk paying rent on a property that you may not be able to afford in a few months’ time? By working from home, or an office outside of London with cheaper rent, and using a virtual office as a business and registered office you can trust and have faith that your business will survive these uncertain economic times. Your outgoings will not dramatically peak and you can focus on paying salaries and other more important outgoings, such as technology and website development, rather than large amounts of rent and business rates.