The UK flexible workspace industry is facing a critical challenge.
If you own or operate a coworking space in the UK, you may have seen the recent warnings from industry veterans. The conversation has shifted rapidly from concern to alarm, sparked by a stark question from Roland Stanley on LinkedIn: "Is coworking about to suffer an extinction level event?"
This is not hyperbole. It is a reaction to a "double whammy" of fiscal policy changes that threaten to dismantle the nation's independent workspace sector. The crisis is driven not by market failure or lack of demand—occupancy rates remain resilient at approximately 80-83%—but by a convergence of hostile state actions.
At Spacebring, we believe in the power of this community. We have analyzed the situation, curating insights from trusted voices like Jane Sartin (FlexSA), Karen Tait, Bernie J Mitchell, and Roland Stanley, to provide you with a clear explanation and a concrete action plan.
Here is what is happening and exactly what you need to do next.
The "double whammy": two crises hitting at once
Independent operators are not facing one problem. They are facing two simultaneous shocks.
Shock 1: The RHL relief reduction
For several years, the Retail, Hospitality, and Leisure (RHL) relief scheme has acted as a critical fiscal buffer for physical businesses. In the 2024/25 tax year, this relief provided a 75% discount on business rates bills.
The Autumn Budget 2024 confirmed that this lifeline will be significantly reduced. From 1 April 2025, the RHL relief drops to 40%.
The implications are severe. A reduction in relief percentage does not result in a proportional increase in bills. For many businesses, it represents a doubling or tripling of their tax liability.
Example: For a medium-sized independent coworking space in London with a Rateable Value (RV) of £80,000:
| Fiscal year | Relief rate | Net payable amount | Year-on-year increase |
|---|---|---|---|
| 2024/25 | 75% | £10,920 | — |
| 2025/26 | 40% | £26,640 | +144% |
This 144% increase in cash payable occurs overnight on April 1st, 2025. It is completely decoupled from the business's performance, turnover, or profit margins.
Shock 2: VOA reclassification (the "single hereditament" threat)
The Valuation Office Agency (VOA) is increasingly reclassifying entire coworking buildings as a single property where the operator is deemed to have "paramount control."
- The legal precedent: The VOA is using Cardtronics v Sykes (2020)—a Supreme Court case about ATMs in supermarkets—to argue that freelancers, consultants, and startups inside coworking spaces are legally equivalent to vending machines.
- The consequence: Small Business Rates Relief (SBRR) disappears. The operator is hit with a single, massive business rates bill for the whole building. And they are pushed from the Small Business Multiplier (49.9p) to the Standard Multiplier (55.5p)—a "fiscal cliff" that compounds the damage.
- The scale: The Flexible Space Association (FlexSA) estimates that 150,000 UK freelancers, consultants, and micro-businesses are at risk of losing their tax relief. These are not SMEs with 50 employees. These are the freelancer paying for a desk, the consultant renting a small office, the three-person startup that just got their first client.
The backdating bombshell
The VOA is not merely applying this change prospectively. They are applying it retrospectively—back to the start of the current Rating List on 1 April 2023.
An operator receiving a notice in late 2025 may find their property reclassified with effect from April 2023. They effectively receive a bill for two years of unpaid business rates, calculated at the full standard multiplier rate.
Financial impact: For a space with a £200,000 RV, the backdated liability could exceed £220,000, payable immediately.
Many independent operators simply do not have the cash reserves to pay a six-figure backdated tax bill. This leads to immediate insolvency. It is a policy that punishes operators for structuring their business based on the VOA's own previous practices.
Why this matters beyond coworking
As Bernie J Mitchell (London Coworking Assembly) frames it:
"Business rates are a tax on collaboration. We house thirty small businesses, none of which would pay rates if they were in their own tiny offices. But because they share a kitchen and a breakout space, we get hit with a six-figure bill."
The Greater London Authority has officially described this as an "affordability crisis" for open workspaces.
There is a deeper structural issue here. Business rates are levied on the occupier, not the owner. The landlord's asset value appreciates while the tenant pays the annual tax for generating economic activity in that space. The system taxes work, not wealth.
This is the VOA's second attempt to push this through. They lost the case in 2023, and changes were implemented then. Now they are trying again.
The industry response
The fightback is being led by Jane Sartin, Executive Director of the Flexible Space Association (FlexSA).
Jane is coordinating a direct appeal to the government, labeling this policy an "existential threat" to the UK's SME ecosystem. The argument is simple: closing coworking spaces does not just hurt landlords. It kills the local hubs that drive economic recovery.
Operators are already taking action:
Roland Stanley (Dragon Coworking, Rochester): Has secured a meeting with local MP Lauren Edwards. His Rochester site supports over 140 small businesses, with 76% classified as local.
Karen Tait (The Residence Coworking): Met with Jane Sartin and Josh Dean MP to agree a plan of action. As she puts it:
"We support thousands of small businesses who are the engine of local economies. This isn't the time to pull the rug out from under them, or me."
Ewan Buck (Contingent Works, Bromley): Has proposed a concrete policy solution:
"Giving serviced offices a different multiplier instead of separating spaces out would simplify the system, save everyone—including the VOA—the admin, and level out the field. If the VOA can separate and identify Retail, Hospitality and Leisure for targeted relief, I am sure they could do it for our industry too."
5 practical steps you must take now
Do not wait for a letter to arrive. Here is your checklist for immediate action.
Step 1: download the FlexSA MP engagement toolkit
The Flexible Space Association has created a comprehensive guide for contacting your MP effectively. It includes template letters, talking points, and advice on framing the issue for maximum impact.
Action:
Download the FlexSA toolkit: "Engaging your MP on business rates and flexible workspaces"
Step 2: write to your MP
MPs care about local jobs and local businesses. Frame this not as a "tax issue" for you, but as a "disaster" for their constituency.
Action: Enter your workspace postcode at members.parliament.uk to find your MP's contact details.
What to write:
- The hook: "I run [Space Name], home to [Number] local small businesses in your constituency."
- The problem: "Recent VOA changes threaten to increase our costs by [X]%, which will force us to raise prices on local startups—or close entirely."
- The ask: "Please ask the Chancellor to urgently review the VOA's approach to 'paramount occupation' in shared workspaces. I would welcome the opportunity to show you our space and the businesses we support."
Key contact: The Treasury contact for this issue is Dan Tomlinson MP, Exchequer Secretary to the Treasury.
Step 3: check your valuation status
You need to know if your building has already been flagged for revaluation.
Action: Go to the government's VOA page.
What to do: Search for your property by postcode. Check if your individual units are still listed separately or if the building has been consolidated.
Expert note: If you see a "Check, Challenge, Appeal" notice or a consolidation of units, contact a rating surveyor immediately.
Step 4: Join the Flexible Space Association (FlexSA)
This is a political fight. Individual voices are easily ignored. The Flexible Space Association is the official body representing the sector to the Treasury.
Action: Join the association and sign up for their updates.
Why: They are coordinating an open letter to Chancellor Rachel Reeves. By joining, you add your data and your voice to the collective evidence they are presenting to the government.
Contact: Jane Sartin — Jane.Sartin@flexsa.co.uk
Step 5: Find the others
As Bernie J Mitchell advises: connect with other operators in your town or city.
Action: Search LinkedIn for other coworking owners in your area. Reach out. Join the UK Coworking LinkedIn Group.
Why: They may have already received legal advice or found a specific rating surveyor who understands the "paramount occupation" defense. One email gets ignored. Fifty emails from fifty operators in the same constituency? That is a movement.
Summary
This is a developing situation. The difference between navigating this crisis and being overwhelmed by it is information and collective action.
The "double whammy" of 2025 is not a temporary market fluctuation. It is a structural crisis that threatens to strip 150,000 freelancers and micro-businesses of their tax relief while hitting independent operators with backdated bills they cannot pay.
But operators are already mobilizing. Three operators have met with three MPs in the past week. The movement is building.
Your next step: Download the FlexSA Toolkit and Write to your MP this week.
Spacebring stands with the UK coworking community. We will continue to share updates from trusted experts as the situation evolves.
