High street shops in England could see their business rates bill quadrupling, collectively increasing by up to £1.95 billion, next year following new inflation data, state multiple industry reports, with industry chiefs warning it will “undoubtedly be the final nail in the coffin for many” firms.
Office for National Statistics on Wednesday (18) revealed the inflation rate for September was 6.7 per cent. The multiplier, which is applied to the rateable value of properties to calculate the tax due, typically rises each April in line with the previous September’s inflation rate.
Estimates compiled by advisory group Altus showed that retail stores will be struck by a £15,300 business rates bill for an average site from next April. This is compared to £3,600 for the current year, subject to caps on tax reliefs.
Jacqui Baker, head of retail at RSM UK, said, “The current business rates regime is already crippling retailers, so the prospect of a £1.95bn jump in rates next April will be impossible for some retailers to find. The Chancellor needs to extend the current relief measures for another year whilst delivering real reform that is fit for purpose to allow the high street to not only survive, but to thrive.”
Helen Dickinson, head of the British Retail Consortium trade body, which represents most of the UK’s big chains, said the rise would “inevitably put renewed pressure on consumer prices” and called on the government to take steps to ease the expected increase.
“As a result, retailers are publicly calling on the Chancellor to freeze the business rates multiplier, allowing them to keep driving down prices, and invest in new shops and jobs.”
Last month, bosses from big retailers including Tesco, M&S and Ikea called on the government to scrap the planned inflation-linked rise in next month’s autumn budget. Experts have cautioned that customers are likely to face more price increases due to the tax rise.
Simon Green, head of rates at Gerald Eve, said, “If the Government were to introduce a 6.7 per cent rise for every ratepayer, at a time when costs are already under enormous pressure, that risks causing further inflation as businesses will have no choice but to pass on the costs to customers.
“Clobbering high streets, retail parks, office blocks and logistics firms with these sky-high rises will also create a significant blow to the economic recovery that everyone wants to see.”
Alex Probyn, global president of property tax at Altus Group, said, “Our clients tell us that the business rates burden is a disincentive to invest and are already at an unsustainable level.”