Businesses will have to pay an extra £3 billion in business rates starting in April, on top of increased corporate tax and inflation.
Indeed, the commercial property tax is set to climb in tandem with inflation, which the Bank of England predicts will reach 13% this year.
According to the British Retail Consortium, merchants alone would pay an extra £800 million in VAT when the temporary 50% exemption ends in April.
“The potential of business rates increasing by 10% next April is immensely alarming, and would be devastating for thousands of small enterprises,” Martin McTague, national chairman of the Federation of Small Businesses, told the Daily Telegraph.
“Because relief for enterprises in hospitality, retail, and leisure is set to expire around the same time, the impact on these areas will be especially severe.”
Companies would be “quaking in their boots” if the incoming chancellor forced up business rates in pace with inflation, adding another £3 billion per year to already unaffordable expenses, according to Jerry Schurder, business rates policy lead at property consultancy Gerald Eve.
A revaluation is scheduled for next April, which will result in new rateable values for 2.1 million buildings in England subject to commercial property tax. The figures will be calculated using open market rental values from April of last year.
The “multiplier” used to calculate the tax is also updated during a revaluation to ensure that bills rise by no more than the rate of inflation on average.
“The Prime Minister argues that her policies are meant for growth, growth, expansion,” Schurder continued, “yet additional business failures and store closures will ensue unless the UBR [Uniform Business Rate] is frozen again.”
Former chancellor Rishi Sunak frozen the UBR, which is part of the “multiplier” used to compute companies’ rates bills, in the last two autumn budgets.
Rates should also be frozen, according to the FSB.
Gerald Eve, on the other hand, stated that the loss to the public finances from these freezes was rather minor, considering inflation was 0.5% in September 2020 and 3.1% in 2021.
