Hundreds of thousands of businesses – including many icons of Britain – will be hit by sudden and dramatic tax rises this April under changes to Government business rates.

By Andrew Gilligan
Published: 8:30AM GMT 03 Jan 2010

The Lions at Longleat Photo: ALAMY
Many will see the rateable value of their premises increased by up to 700 per cent and some will see the actual total they pay more than double overnight.
Among the biggest victims are county cricket grounds, zoos and safari parks, historic buildings, livestock markets, filling stations, heritage railways, and lifeboat stations. Pubs, shops and restaurants are also hit, though most workshops and factories will see lower bills.
The rateable value of Headingley cricket ground will rise by 166 per cent and that of Lord’s will double. Longleat House and Safari Park has a 142 per cent rise and a busy lifeboat station in Devon faces a 354 per cent increase. Even the Houses of Parliament themselves suffer a 72 per cent rise in their rateable value.
There was growing anger last night at the “arbitrary” and “unfair” changes. Although most businesses will pay modestly less after April, some sectors and regions of the country – London, the South West and Wales – will be massively hit. Rural and traditional businesses will suffer disproportionately.
Traders in the historic port of Dartmouth, Devon, have dubbed themselves “tax disaster town” after virtually every business found itself landed with an increase in its rateable value of between 98 and 338 per cent. Twenty-one of the 25 shops on Dartmouth’s attractive Fosse Street have increases of more than 300 per cent and none has an increase of less than 135 per cent.
Tessa de Galleani, chairman of Dartmouth Chamber of Trade, said: “Some shopkeepers have already made staff redundant or decided to close. I think in Fosse Street alone, there will almost certainly be five closures.
“People are frightened that Dartmouth will become a summer-only town. It is madness, completely unfair, and we have a huge amount of support for our fight against it. This is the only tax that has no bearing on whether or not you can afford to pay it.”
Many other areas of speciality shopping are at risk from the changes, including Cecil Court, off London’s Charing Cross Road, home to the world’s largest surviving concentration of second-hand bookshops.
The capital is particularly hard hit because as well as the revaluation, larger businesses will have to pay a separate, supplementary rate levied by the Mayor, Boris Johnson, to help fund Crossrail.
There are also startling differences in the treatment of apparently-similar businesses in the same places. On Park Lane, London, the Hilton hotel has an increase in rateable value of 38 per cent. The nearby Dorchester, on the same street, sees its rateable value rise by 115 per cent.
On Royal Hill, a side street in Greenwich, south east London, four pubs stand within feet of each other. However, two have an increase in their rateable value
of just 12 per cent, a third – next door – has an increase of 228 per cent and the fourth, ten doors down, has an increase of 704 per cent.
Guidance to inspectors from the Valuation Office Agency, which sets the values, says that pubs should be uprated if they “appear friendly and popular”. Services such as Wi-Fi and – in rural areas – the increasing tendency of pubs to incorporate post offices and shops will also raise rateable value.
The revaluations, which have taken place across England and Wales, are carried out every five years. However, critics say the 2010 revaluation is unfair because it is based on property values and trading conditions at the peak of the boom, in April 2008, and not the much more difficult situation now.
Each property’s bill is calculated by multiplying its rateable value against the national business rate – expected to be 41.4 pence in England this year. This is 15 per cent lower than last year, so any business whose rateable value has increased by less than around 15 per cent will be better off.
For the losers, the Government is introducing “transitional relief” which theoretically limits the maximum increase a business must pay in 2010 to 12.5 per cent, still more than six times the rate of inflation. However, bills will rise sharply in subsequent years, with up to a 17.5 per cent increase in 2011, for instance, then 20 or 25 per cent increases in each of 2012, 2013 and 2014.
Many smaller traders will also suffer far higher rises than 12.5 per cent straight away because the massive increases in their rateable values mean they no longer qualify for lucrative “small business” concessions. Some say their bills will more than double overnight.
Sarah Duggan, of the Baxters art gallery in Dartmouth, says that even with transitional relief her bill will rise in April from £1,140 to £2,475. “I just think it’s shocking,” she says. “I am already working more hours rather than employing staff. They say small businesses are the backbone of the country, but we are running on very tight margins.”
Although collected by local councils, business rates are set by the Government and are uniform across the country. The issue has often been politically toxic in the past and is blamed for the election defeat of the then Tory Party chairman, Chris Patten, in Bath, where many traders suffered massive rises in their bills.
The shadow communities and local government minister, Justine Greening, said: “Local firms face a tax bombshell in April thanks to Labour’s business rates revaluation. It is the height of economic incompetence for ministers to change the way that a £21 billion tax works in the middle of a devastating recession, and the worst possible time for such a shake-up.”
A spokesman for the Department for Communities and Local Government said: “Revaluation does not collect an extra penny in revenue for the Government. The majority of businesses will see their rates fall. The rises in London and the South West reflect the growth in rental values in those regions.”
The spokesman said that the high increases suffered by particular kinds of business was a “fair” reflection of their growing prosperity. “County cricket grounds, for instance, have benefited from the popularity of the Twenty20 game and this has generated significant income,” he said.