Fresh fears that business rates increase could hit investment

The Federation of Small Businesses (FSB) research suggested more than a third (36 per cent) of small firms expect to see their rates increase, with 44 per cent expecting bills to eventually rise by more than £1,000 a year.

Of the firms expecting a rise in rates, more than half (54 per cent) expect profits to fall and more than a third (38 per cent) will increase prices.

The majority (55 per cent) of those facing increases plan to reduce, postpone or cancel investment, which the FSB said would hit UK productivity and growth.

FSB national chairman Mike Cherry said: “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.

“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.”

The poll comes as Labour prepare to hold a special event today to intensify the pressure on the Government ahead of next week’s Budget.

Following pressure, the Government has established a £3.6bn transitional fund to help businesses facing sharp increases when the property-based levy is updated for the first time since 2010. Ministers insist that almost three-quarters of firms will see rates decrease or stay the same, while 600,000 of the smallest businesses will be taken out of the tax altogether.

However Labour says the issue of business rates is a “ticking time bomb” as shadow business secretary Rebecca Long-Bailey called for “immediate” relief to stop thousands of firms going out of business.

Labour’s plan, says Ms Long-Bailey, would include a fund worth £150m a year for the next three years for small and medium-sized firms at risk of bankruptcy due to “sharp and unmanageable” increases.