London business cries out for overdue reform on its property taxes


London business is being hit with a £1.2bn bill (Source: Getty)

London firms are warning that their business rates burden must be lifted as the property tax is having a disproportionate effect on the capital.

The Federation of Small Businesses (FSB) has said London firms are grappling with a tax rise of £1.2bn this year, and pay almost a third of all the business rates collected.

The group is calling for reform, arguing that the threshold at which small businesses start paying business rates should be lifted.

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Currently, businesses with a rateable value of £12,000 pay no rates, but the FSB is suggesting that this threshold should be increased to £20,000 in inner London and £15,000 in outer London.

Firms are also calling for more recent revaluations of business rates, meaning that any changes in the level of tax paid by companies would be more manageable. 

Sue Terpilowski, London policy chair of the FSB, said: “Many small firms are still reeling from the business rates revaluation that took effect in April. It is critical for politicians of all persuasions to understand how the cost of doing business in the capital is blighting opportunities for small firms.

"By adopting the calls for action in this report we can grow the one million-strong businesses community in the capital to even greater numbers.”

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The lobby group has also raised concerns about the cuts to the Valuation Office Agency (VOA), which checks the rates paid by firms. Several businesses are worried that the VOA will be less able to process the rates appeals handed in by firms, thus slowing down any compensation payouts they may be entitled to.

London mayor Sadiq Khan said: "It's time that ministers acknowledged the damage their excessive business rates hike is having in London and set out plans to create a fairer system. Of course London needs to pay its fair share, but the current system is unfairly skewed against the capital."