Today Money Mail reveals the biggest victims of the business rate tax hike — the family-run shops facing increases of up to 3,000 per cent.
This is 600 times higher than the 5 per cent cap on rises the Government insists it has implemented for small businesses.
A loophole means many of the country’s smallest and most vulnerable shops will be worst hit by the changes.
Our research found one case where eight shops on a small parade of 30 stores will each have to find an extra £3,000 in tax this year thanks to increases of more than 1,000 per cent.
Uncertain future: Gift Nwachukwu, who started her hair extension and wig specialist shop two years ago, said she won’t be able to afford the increase in business rates
The hairdresser faces a rise of 3,115 per cent, the noodle bar a 2,049 per cent increase and the fish and chip restaurant will pay 1,186 per cent more.
In total, 17 of the 30 shops in the Market Place square in the Hertfordshire town of Hatfield face paying £50,000 more in rates this year and £400,000 more over the next five years.
Its hair and nail salons, cafes, takeaways, grocery stores and delis all face closure as a result.
The giant hikes in so-called business rates threaten to destroy the livelihoods of shopkeepers across the country.
Without protection for small firms, entire High Streets could disappear. So as part of our Save Our Shops campaign launched earlier this month, Money Mail is calling on ministers to soften the blow.
The Government must find a way to help businesses hit by the highest increases — and then overhaul the way the tax is calculated.
Concerns: Maz Taycur who runs the Jenny’s cafe on Market Place in Hatfield and faces an increase from £152 to £3,266 Pot of gold: Samantha Mui, 36, who has run the Rainbow Noodle Bar in Market Place for nine years, faces a hike from £152 to £3,266 — a 2,049 per cent rise
The Department for Communities and Local Government has repeatedly said: ‘No small business will see more than a 5 per cent increase this year.’
This is supposed to help firms adjust. But our research exposes a major loophole in these so-called transitional arrangements.
Crucially, the 5 per cent cap fails to take into account the tax relief currently helping small shops such as those in Hatfield.
Properties worth less than £6,000 a year on the rental market pay no business rates at all. Those worth between £6,000 and £12,000 get discounts on a sliding scale.
From April, properties with a rateable value of up to £12,000 pay no rates. Those between £12,000 and £15,000 will receive discounts on a sliding scale. This sounds more generous than the existing scheme.
But in areas such as Market Place the property market has soared by so much that they will be stripped of the discounts.
Sixteen of the 17 shops that face rate rises in April have lost relief this year after the rateable value of their premises rose above the £12,000 threshold.
In four cases, the shops were previously worth less than £6,000, meaning they paid no business rates at all. Now these shops will have to find between £2,800 and £2,900.
Hike: Sammy Sabir, 64, pictured outside his Best One convenience store, has been paying nothing but will now have to find £2,799
It’s a burden many cannot shoulder in this faded parade, which has clearly seen better times.
Despite its name, the Market Place no longer hosts the twice weekly market after the council moved it last September to the other side of town.
Reduced footfall had left the parade of family-run businesses teetering on the edge of survival.
The shops are also under pressure from a large Asda superstore next door as well as the nearby Galleria shopping centre.
Gift Hair Collection will have to pay £3,214 from April, up from £100 last year — equal to a rise of 3,115 per cent.
Gift Nwachukwu, 32, who started the hair extension and wig specialist shop two years ago, says: ‘I simply cannot afford it. ‘I have been building the business up and have not paid myself for two years.’
The Government would argue that Gift technically faces only a 5 per cent rise, plus inflation.
This is because last year’s bill would have been £3,001 before small rates relief was applied. A 5 per cent rise, plus inflation, would take the bill to around £3,214.
But Gift Hair Collection is no longer eligible for the relief because the rateable value shot up from £6,200 to £17,750 in the latest revaluation — above the £15,000 threshold.
It follows big rent rises in the area, partly due to a strong student population.
Gift says: ‘We provide a service from people with alopecia to hair extensions. I have trained four people, but I won’t be able to keep going.
‘The Government should be supporting us, not forcing us to close.’
In total, 17 of the 30 shops in the Market Place square in the Hertfordshire town of Hatfield face paying £50,000 more in rates this year and £400,000 more over the next five years
At Appleby’s fish and chip restaurant, the rateable value has rocketed from £6,500 to £18,500. That means its tax bill is going up from £262 to £3,369, a rise of 1,186 per cent.
Hasan Adakan, 49, of Appleby’s, says: ‘My family has been here since 1990. Shops here are already empty and more will follow.’
Samantha Mui, 36, has run the Rainbow Noodle Bar in Market Place for nine years.
She faces a hike from £152 to £3,266 — a 2,049 per cent rise — after the rateable value of the shop jumped from £6,300 to £18,250.
Nearby Jenny’s restaurant faces the same rise. ‘It is a disaster’, says Samantha. ‘We cannot survive these rates.
How can a small business like us carry on?’ Sammy Sabir, who runs the Best One convenience store agrees. He was exempt from the tax for the past eight years because his shop was below the threshold — but must now pay £2,799.
‘We even open Christmas Day and New Year’s Day to keep our heads above water,’ he says. ‘The value of the property may have gone up but business has not.’
Wei Wu, 39, a director of China Sky, a Chinese restaurant and takeaway, also fears he may lose his business. His rates bill will soar to £4,610 from £1,540.
Wei plans to appeal through the Valuation Office Agency. ‘If we lose we will have to think about selling the business,’ he says.
Experts say rental values, which decide business rates, have been pushed up by students at the University of Hertfordshire, as well as big hikes in council rents.
Nick Brown, chairman of Welwyn Hatfield Chamber of Commerce, which helped to collate the data, says: ‘There won’t be any community based businesses left soon. Let’s simplify and reform business taxes so they are based upon profits and are affordable.’
Jerry Schurder, at business rates specialist Gerald Eve, says: ‘Most occupiers in Market Place will benefit from transitional relief.
‘But for the independents who have been benefiting from small business rates relief and will lose some or all of this, the leaps will be enormous — in some cases 32-fold.
‘Surely the Chancellor must announce in the Budget that he will reduce liabilities for genuine small businesses that are losing their small business rates relief.’
A Government spokesman says: ‘Three quarters of businesses will be seeing a fall, or no change.
‘The generous reliefs mean 600,000 small businesses are paying no rates at all, something we’re making permanent.
‘And across the country, there’s also a £3.6 billion scheme to support companies affected by the business rates revaluation.’