Independent retailers could find themselves under increased pressure as they struggle to cope with dramatic increases in business rates, the Federation of Small Businesses has warned.

More than 1.5 million companies are set to receive their business rate bills in the next few days and the FSB said all companies will face sharp rises this year, with an average increase of 15.7 per cent.

It said shop owners in the south-east of England will be hardest hit.

Business rates are the second or third highest item of expenditure for most small firms. Currently, rates are five times more expensive as a proportion of turnover than they are for large companies, according to the FSB.

Roger Culcheth, FSB business rates chairman said: “The odds are already stacking up against small shops and we are concerned that some independent retailers will find it impossible to absorb these additional costs.”

The recent revaluation of business premises by local authorities has led to a huge increase in the rateable value of shops, particularly in wealthy areas.

The rateable value is based on the going rate for a particular area, irrespective of whether the business is doing well or making a profit.

However, on the plus side, small firms with rateable values of £5,000 or less can apply for rates relief - a 50 per cent discount on their business rates. The relief decreases on a sliding scale for rateable values of between £5,000 and £10,000.

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