Business premises are revalued every five years to ensure that rateable values reflect changes in the property market. However, the next revaluation due to take effect in April 2010 is based on rent prices from April 2008, before the recession and when property prices were high.
The Forum of Private Business expects an average rise of 3% next April, and policy represen-tative Matt Goodman said it would prove difficult for many firms. "With no transitional relief in 2009/2010 and a 5% rise in the multiplier used to calculate their bills, small businesses are feeling the impact of changes in their business rates," he said.
Mike Holling, retail and sales manager for Birds of Derby, said the rates issue was a major concern for bakers around the country. "It's another unwelcome cost we could all do without," he said. "It affects everyone, but I don't think a lot of companies will have realised the situation until the re-evaluation drops on to their mat. There may be some improvement in the economic situation but no-one is feeling very confident."
London mayor Boris Johnson has called on the government to rethink the proposed rise, which would mean a 10% increase in business rates for London companies over the next five years.
Igor Bekaert, MD at the nine-strong Belgique Bakery chain which has stores in the capital, said: "I hope the rates will be frozen, but it's a big worry. Our shop in Brentwood has been re-evaluated at £14,500 up 5%. This is a massive jump and it will be a challenge to find the money."
Bekaert is contesting the rise, using an agency to try and get the rateable value reassessed. "They get 50% of the saving if they succeed, but it would be worth it," he added.