Business Rates Rise Could Hit Your Cash Flow

If your business has an empty property you could see a dramatic increase in your business rates from April.

That’s the stark warning coming from the Federation of Small Businesses (FSB). They believe that from the start of the new tax year, April 6^th, the exemption for vacant properties with a rateable value of under £18,000 could be significantly restricted.

This could have a major impact on the cash flow and financial planning for many firms across the UK. Many that survived the recession did so by contracting, reducing their workforce and closing down some branches. As a result large numbers still have more space than they need, including completely empty buildings.

Many firms have enjoyed business rates exemptions for two years

Before the recession, firms with vacant premises were granted a six month exemption from business rates and when this expired the charge returned to 100%. This was a deliberate policy to discourage commercial buildings being left empty for years. There were certain exemptions, such as listed buildings and those with a rateable value under £2,200.

To ease the burden of the economic downturn, the government raised the exemption threshold to £15,000 for 2009/10 and then £18,000 for 2010/11. This saved thousands of pounds for companies burdened with offices and workshops they no longer had a use for and were unable to sublet.

But the FSB is worried that from April the government is planning to reduce the threshold down to £2,600. Which means if your business is one of those paying rent on or owning empty space you could find yourself with a demand to pay business rates on it for the first time in a couple of years.

Higher business rates demands cash flow planning

Having to find an extra few hundred pounds a month could put enormous strain on your already stretched cash flow. If this impending change is going to affect your business it’s wise to start planning now and to determine what actions to take.

Cash flow forecasting is an essential control in every business and it’s situations like this that show why. If you don’t assess the impact now and consider your options, you could find yourself with serious problems in just a few months time.