Today’s Inflation Signals A £728 Million Business Rates Hike Next April
- A 2.4% uprating for inflation will add an additional £728.20 million to the overall gross business rates burden
- Retail sector will face a £186.45 million increase next April despite the ongoing high street crisis
- Standard tax rate for larger premises will go above 50% or fifty pence in the pound at 50.5p, the highest rate since business rates introduced in 1990
September’s Consumer Prices Index (CPI) measure of inflation, announced today at 2.4% will determine business rate rises in England next April for 2019/20, the third year under the controversial revaluation, with the Uniform Business Rate (multiplier – pence in the pound) uprated annually for inflation.
According to real estate advisor, Altus Group, business rates bills next year for 2019/20 will increase by £728.20 million in England with £186.45 million of that increase being shouldered by the embattled retail sector without intervention from the Chancellor at his Autumn Budget later this month.
The standard multiplier, which applies to 492,165 larger premises in England who’s Rateable Value is £51,000 and above, will rise to 50.5p, in England from April next year, the first time the tax rate for business rates will have gone above 50% according to Altus Group.
When the national business rates system was introduced in 1990, the multiplier was set at 34.8p.
Business rates bills are calculated by multiplying the property’s Rateable Value, an estimation of the open market annual rent on 1st April 2015, by the multiplier.
The multiplier represents the number of pence in each pound of the Rateable Value that will be payable in business rates before any reliefs or discounts are applied.
Chancellor Philip Hammond sought to appease concerns over last year’s business rates revaluation, announcing a £2.3 billion reprieve in his Autumn 2017 Budget by bringing forward plans to switch from the discredited Retail Prices Index (RPI) measure, 2 years earlier, from April this year.
Robert Hayton, Head of U.K. Business Rates at Altus Group, said “Businesses, until this year, have had to endure annual increases at the higher discredited RPI measure. Since 2010, the average rates bill has risen by a fifth through the compound effect of inflation. Our high streets are engulfed in crisis. Brexit uncertainty is hurting both manufacturers and the services industries. It is time for the Chancellor to take a step back and support business through an unprecedented stimulus by freezing rate rises next April.”
The average business rates bill in England has risen from £11,016.88 during 2010/11 to £13,156.75 this year up £2,139.87 or 19.4%.