Some small businesses could see their bills more than double
Under a controversial overhaul of the system due to come into force in April, only businesses with a rateable value of up to £12,000 are exempted from paying the tax, while those in properties up to £15,000 can access a discount.
Retailers in some parts of London have warned that their bills could more than double as property prices continue to skyrocket.
The Federation of Small Businesses (FSB) and Camden Town Unlimited (CTU) have begged Chancellor Philip Hammond to raise the threshold for business rate relief within the capital.
Their plea comes as a new FSB survey finds that three quarters (74%) of firms said business rates are one of the biggest issues facing them.
This dramatically higher than the 36% who said economic uncertainty and the 33% who said recruiting the right staff are their biggest concerns.
Simon Pitkeathley, chief executive of CTU, said: "This research confirms what we have been hearing from the businesses we represent.
Industry leaders have urged Philip Hammond to raise the business rates threshold
"The new business rates will drive firms out of London, force some businesses to cut staff or close down altogether.
The average micro business will have to find £17,000 to cover business rates
Sue Terpilowski of the FSB
"Given the importance of London's economy to the rest of the UK, this will have destabilising consequences.
The FSB and CTU suggest businesses in inner London properties with a rateable value of up to £20,000 should be exempted from the tax, while relief should be tapered up until £23,000.
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In outer London the threshold for exemption should be set at £15,000 tapering to £18,000, the organisations said.
The FSB is concerned that small business will be driven out of London
The FSB says the extra relief would cost around £100 million, which it argues is a "comparatively small" when considered alongside the £28 billion revenue derived from business rates nationwide.
Sue Terpilowski, the FSB's London chairman, said: "London is in serious danger of losing its vital support system of micro and small businesses.
"The average micro business will have to find £17,000 to cover business rates from April this year.
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"But this increase must not be viewed in isolation as small firms will face an extra £2,600 in additional employment costs from Government policy in the 2017/2018 tax year, inflationary increases and a further increase in pensions auto-enrolment costs."
She added: "We need to realise that the hard costs of operating a business in the capital are starting to outweigh the benefits which simply does not make economic sense – and so tackling these burdens at the Spring Budget is critical."
The survey of 129 small businesses also found that four in 10 expect to see an increase of above 20% in their business rates.
And three in 10 (31%) said they are unsure of what the change will mean to their business.