In 2020 to 2021, in response to the pandemic, the Government provided 100% business rates relief to all occupied hospitality businesses. During 2021 and 2022, the relief gave a 100% discount for the first three months, then a 66% discount for the remaining nine months with a cap on the relief for each business of £2m.
In 2022, it was tapered even further to a 50% discount with a cap of £110,000 on the relief per business, however, this will end completely on 31 March 2023.
Altus Group UK president Robert Hayton said: “For a self-proclaimed low tax, pro-growth, pro-business Government, it beggars' belief that inaction on business rates could see the total tax take rise by £5.33 billion next April with discounts for retail, leisure and hospitality ending as well as the Government profiteering from high inflation.”
Call for support
This comes after trade bodies campaigned for fairer business rates to help the sector battle the ongoing energy crisis.
UKHospitality 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.”
The distribution of the business rates tax is set through revaluations which periodically reassess and update tax liabilities to reflect changes in the commercial rental market.
The next revaluation comes into effect on 1 April 2024 based upon an estimate of open market rends on 1 April 2023.
The Government said this will help make sure changes in market values will be reflected in tax liabilities.
Rising rates
But, despite the revaluation which will be revenue neutral, overall business rates revenue for 2023 to 2024 will rise in line with September’s CPI measure of inflation.
CPI rose by 9.9% in the 12 months to August 2022 which, if repeated in September, would see non-domestic buildings in England such as pubs, restaurants and bars facing a £2.66bn business rates hike during the 2023 to 2024 financial year according to the real estate adviser Altus Group.
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.
