For the first time in seven years, the government has re-evaluated business rates. This is a tax that businesses pay on their premises, equivalent to domestic council tax.
The rate a business pays depends on the perceived value of the property, as decided by a government surveyor. The new rates will be coming into force in April, but the changes have attracted controversy.
Substantial changes
In England and Wales, rates are usually updated every five years. This time there was a two-year delay, which many people think was to prevent the hike coinciding with the 2015 general election. As a result, some rate rises are steeper than normal. Although the changes are being phased in, the maximum increase for the first year is capped at 42%, when previously the cap was 10-12%.
Winners and losers
As there are very different property markets across the country, the impact will vary depending on region. For example, in parts of London businesses will find their rates doubling while business owners in the north of England (where property prices have fallen) may find they've been paying too much tax since 2015. One example is the online retail giant Amazon. They'll be getting a tax cut, as their warehouses are in low-value, out-of-town locations.
The controversy
Rate changes can be particularly problematic in areas currently going through the gentrification process. As property values skyrocket, smaller businesses who have been there for years could find themselves priced out of their neighbourhood. It's estimated that some businesses may see rate hikes of up to 400%.
Positive news
After substantial public outcry, Philip Hammond announced plans to help small businesses with their rates in his first Spring. This could, for example, involve an increase to the £3.6bn fund for transitional relief.
While more than 500,000 business owners will see rates increase, the government has noted that for 1.34 million British businesses rates will either fall or stay the same.
Another small bonus is that business leases are locked in for many years, and rates with them, so retailers who rent their property will have a bit of breathing space before the full effects of any increases are felt.
