Current Business Rates Challenges may be “the Tip of the Iceberg” as increases Loom.
The Consumer Price Index (CPI) Figures at 1.7 % being announced mean businesses are due to pay an extra £500 million in Business Rates from next April — on top of the £1.74 billion rise already seen this year.
Business Rates bills in England and Wales are estimated to rise by a total of £0.5 billion next April, to provide the central coffers with almost £30 billion in funds. This rise comes on top of the £1.74 billion raise seen in April 2024. Questions as to whether such rises year on year are sustainable long term for all sectors of the economy need to be asked.
Rates bills rise in line with inflation every year and are based on the CPI figure for the previous September. With CPI for September 2023 announced at 1.7%, the total estimated income for government from business rates in England and Wales is expected to rise from around £29.4 billion in 2024/5 to £29.90 billion 2025/6 from next April. This rise came on top of the 6.7% rise in business rates bills already faced by businesses in April 2024.
The further rise is bound to occur unless the government steps in and freezes the business rates multiplier for all sizes of business. Last year Chancellor Jeremy Hunt froze the multiplier for small businesses at 49.9p. However, the standard multiplier was untouched and rose with inflation reaching 54.6p for the current tax year.
Without government intervention, there is increasing concern that that all sectors will be penalised by this unsustainable tax:
Considerations and percentage liability by sector…
Retail
The sector pays around 21 % of the total business rates tax bill and will see its rates bills rise by around £105 million next April. This comes on top of the £366 million rise it saw this April 2024. The sector will be hit even harder if business rates reliefs come to an end at the same time. This could have a deep impact on retail businesses in the high street. As a result retail campaigners are calling for a reduced multiplier -“The Retail Rates Corrector” – which would mean a 20% downward adjustment in business rates paid on retail properties. The government is reported to be considering this proposal, as a way of helping the high street.
Logistics / Manufacturing
Pays a hefty 27% of the total business rates tax bill and saw steep rises in its rates bills last year, as a result of the 2023 Revaluation. Colliers estimate the sector will see its rates bills rise by around another £135 million in April, on top of the £453 million rise seen this year.
Offices
Representing 23% of the total rates bill is expected to face an extra £115 million on its total rates bill, on top of the £401 million rise experienced this year. At a time when companies are still analysing their office space requirement, this is certainly not going to help the “case” for investing in office space.
Following this trend appears unsustainable. In two years (2024/5 and 2025/6) the burden of business rates will have increased by £2.25 billion across the board.
In a period when all sectors are suffering from increased costs, whether from increased wage bills, materials or energy costs, let alone a 50p in the pound multiplier we are on hand to help businesses of all sizes from any sector.
