Businesses in Dundee city centre will suffer a massive hike in their rates next month — with some facing increases of more than 60%.
The sharp rises have led to a warning that many shops and restaurants in Dundee may be forced out of business by soaring costs.
French restaurant Bon Appetit in Exchange Street will see its rates rise by 61% to £3784 from April 1.
Owner John Batchelor told this The Courier this week, “The rise isn’t millions of pounds but in respect of a small business with a small turnover it is very significant.
“We employ five people full-time but it is a small restaurant and this really raises our overheads.”
He said impending increases in National Insurance would also put a greater strain on small businesses.
“I can’t believe we are prepared to allow increases in rates to small businesses at a time like this, ” he said. “Small firms are needed to help the economy.”
Mr Batchelor is to meet the rates assessor to discuss the valuation of his restaurant but is not the only businessman to have been hit by a huge increase in their bills.
Business rates are determined on the notional rental value of a property and a revaluation takes place every two years.RevaluationAccording to the Scottish Government 60% of firms will see their rates fall as a result of the revaluation but many city centre firms are not so fortunate.
Norrie McDicken runs two salons — Nori on Reform Street and Nori Hairdressing on Union Street — and said both premises will be hit by a massive increase in rates on April 1.
The Union Street salon’s rates will rise by 15% while his Reform Street salon is being hit by a 27% increase and will now have to pay £4181.88 for the year.
Mr McDicken said he was shocked at how much extra small businesses are being expected to pay while the UK is still struggling out of recession.
“Rates for both salons have gone up, although in Reform Street it is much higher, ” he said.
“I phoned the assessor and he said it is because of the rents in the area and the prices are being pushed up by the Overgate.”
Mr McDicken added that the number of empty units in Reform Street, one of Dundee’s main shopping streets, shows how difficult is has become for businesses to survive.
He said, “There never used to be any empty shops — stores would be straight in here when there was a vacancy.
Mr McDicken added, “Now there are about four or five empty units and any time a new shop opens it’s a charity shop.”
He is now considering closing his Union Street shop.
“It’s not just the rates increase but lots of other things, ” he said.
“We are paying our taxes and people’s wages through them but nobody seems to be doing anything to help small businesses.”
Earlier this month it was revealed that hotels in Scotland would be hit particularly hard by the rates increase.
Because hotels are valued on their turnover rather than the rental value of their property, some face increases of 125%. The Apex in Dundee will see it rates increase by £65,000.
However, a spokesman for the Federation of Small Businesses (FSB) said the revaluation would benefit the majority of small firms in Scotland.
“The Scottish Government has rightly pointed out that 60% of buildings have seen a drop in their non-domestic rates, ” he said. “The 40% that have seen an increase are mostly public buildings or public utilities — on the whole small and medium-sized businesses don’t seem to be the worst affected.
“Those specific firms that do see an increase will face more pressure.”
He said the FSB is working to help those businesses affected by sharp increases in their rates but warned there is no one-sizefits-all solution.
“We have to be careful about quick fixes. It’s all about a sensible, pragmatic approach, ” he said.
“There has been a lot o discussion about transitional rate relief, which would see the 60% of buildings that will see a drop not have it introduced as quickly but what we don’t want to see is the small firms that should benefit effectively subsidise supermarkets.”
He added that firms can appeal the valuation if they think it is excessive but for most the Scottish rates system is far kinder than that in England and Wales.
“Scotland has the most generous rates relief system in the UK and large numbers of smaller businesses are not paying anything at all, whereas they would have to pay in England or Wales.”