Inflation signals £2.66bn business rates hike
The consumer price index (CPI) increased by 9.9% in the year to August 2022 and if this was also the case for September, would mean businesses including pubs will be facing a £2.66bn rise in business during for the 2023/24 financial year, real estate adviser Altus Group estimated.
As business rates is set through revaluations, the next comes into effect on 1 April 2023 for non-domestic properties in England and is based on an estimate of open market rents on 1 April 2021.
According to Altus, the Government said this would help ensure where there have been changes in economic activity that have driven changes in market values, the shifts will be reflected in tax liabilities.
Inflation rate rise
However, despite the revaluation, overall business rates revenue for 2023/24 will still rise by September’s CPI inflation rate.
Altus Group UK president Robert Hayton said: “It would be unthinkable for a pro-business Prime Minister who campaigned to cut taxes to then hike business rates.
“The time has come to end the ridiculous policy of annually increasing upwards rates revenue by inflation through ha renewed focus on growth to drive local taxation revenues instead.”
Trade bodies including UKHospitality have called for action on business rates alongside other measures of support to help the sector battle the ongoing energy crisis.
Support needed
Chief executive Kate Nicholls said: “Among other support we need [is a] VAT cut to 10% and a business rates holiday for all hospitality premises, on top of a freeze on energy prices to help us in the short term.”
Following a survey from the association, almost 300 hospitality firms including Mitchells & Butlers signed an open letter to new Chancellor Kwasi Kwarteng, calling for a “plan that cuts business costs, stimulates demand and tackles inflation”.
The letter had a five-pronged plan of action to April 2023, alongside a review in early next year.
This included a 10% headline VAT rate for the sector, a business rates holiday with no caps, deferral of all environmental levies, to reinstate a generous HMRC Time to Pay scheme and the reintroduce a trade credit insurance scheme for energy.
