For the first time in seven years, business property revaluations are taking place, which will see business rates rocket, particularly in London and the South East.

For small businesses in cities and town centres that have experienced a property price boom, it will represent a huge increase in overheads that many can't afford.

To counter the fears of mass closures, the Chancellor unveiled a £435m business rates relief fund in March, that would see many pubs receive a £1,000 discount as well as giving local authorities discretionary funds for any SME struggling with the rise.

In an industry where every penny counts, pub owners and managers up and down the country breathed a small sigh of relief.

But it was short-lived as it was also revealed that the rate would only be for 12-months, after which pubs are on their own. Our advice to you – take advantage while you can and make sure you get any relief that you qualify for.

 

Are you eligible for relief?

Well the main criteria are that you must have a rateable value [rental income of the property] of less than £100,000 and you must be based in England. Devolved governments in Scotland, Ireland and Wales can set their own rates.

Pubs minister Andrew Percy says that this means up to 17,000 pubs may be eligible for the relief discount, which will end on 31st March 2018.

Sounds good in theory, but that isn't even half of all pubs; there are over 50,000 pubs in the UK according to the British Beer & Pub Association.

And, those hardest hit in the rate hike – urban and city centre pubs – will also be in areas where rateable value of property will be over £100,000 and so don't qualify.

In addition, EU rules restrict state aid for businesses with multiple properties. This may mean that while individual sites might qualify, a medium to large chain of pubs would potentially lose out.

As 'lifelines' go, this one is not only temporary but also seems to benefit very few people.

Of course, the law is the law and businesses must pay their taxes. And, the hospitality sector has weathered many storms and come out the other side and this time will be no different.

 

Make plans sooner rather than later

Key to managing the rise in rates is careful financial planning sooner rather than later yet this can be easier said than done. A major challenge for pub owners is often a lack of access to the finance they need to do this. Banks can be averse to the potential risks posed to lending to pubs, largely because they don't understand the sector and its challenges.

Maybe you need to pay wages on a weekly basis, or need to borrow money at a time when takings are down, to prepare for a busy summer or Christmas. Either way, there are funding options out there, from providers that DO understand the issues.

So, if you are worried you'll struggle with the business rates rise then my second piece of advice to you is to seek the support you need from a funder that's right for the job – after all you wouldn't ask your chef to pull pints, would you?