September’s CPI Rate Signals Business Rates Rises Of £160 Million In England Next April
The Consumer Prices Index (CPI) measure of inflation for September, released by the Office for National Statistics on 21st October, determines business rate rises for the following financial year (2021/22) with the Uniform Business Rate (pence in the pound tax rate) increased annually in-line with inflation.
In 1990/91, when business rates in their current form were first introduced, the standard rate of tax for business rates in England was 34.8p, a rate comparable to other tax rates at that time. UK Corporation tax was 34%. Whilst Corporation tax today stands at 19%, in contrast, the standard rate of tax for business rates for the current financial year for 2020/21 is 51.2p, a near 50% increase, resultant from compound inflation.
September’s headline rate of inflation of 0.5% signals that gross business rates bills next year for 2021/22 will increase by £159.42 million in England, of which £50.12 million will be shouldered by the embattled retail sector, according to forecasts from the real estate adviser Altus Group.
The Chancellor’s winter plan missed the opportunity to deliver discerning targeted support to help with business rates bills next year with 358,264 occupied retail, leisure and hospitality premises being returned to full business rates on 1st April after having had a £10.13 billion rates holiday in England this current financial year according to further analysis from Altus Group.
Robert Hayton, Head of UK business rates at Altus Group, says “Government has an opportunity to disprove detractors, showing that the business rates system is in step with reality ensuring appeals to reduce property values because of Covid are accepted quickly, and at the same time, injecting additional targeted financial support to where it is needed most.”
Business rates are devolved to Scotland, Wales and Northern Ireland.