£2.66bn tax hike looming
According to analysis by intelligence firm Altus Group, 252,414 businesses including pubs, restaurants, cafés, hotels and shops currently receive 75% relief on their business rates bill up to £110,000 per business, which was estimated to cost the Treasury £2.41bn this financial year in England.
The relief is set to come to an end on 31 March next year and many voices from the sector have been calling on the Government to act on business rates at the upcoming Budget.
Altus stated continuation of the relief hasn’t been factored into the Office of Budget Responsibility fiscal forecasts.
Finance black hole
The consumer price index (CPI) headline measure of inflation for September, which is due to be released this week (Wednesday 16 October), will determine business rates for the next financial year with the uniform business rate (pence in the pound tax rate) increased annually in-line with inflation.
Economists have forecast CPI is set to fall from 2.2% in August to 1.9% in September, below the Bank of England’s target rate. However, Altus estimated the overall business rates burden across all property types and sectors would also rise by £545m, which it predicted £250m will be shouldered by the hospitality, retail and leisure industries.
Altus Group property tax president Alex Probyn said: “Despite the £22bn ‘black hole’ in the nation’s public finances, the Chancellor must now prevent a cliff edge for the retail, hospitality and leisure sectors at her upcoming Budget while also delivering upon Labour’s manifesto commitment to lower the undue burden already placed on our high streets.”
Government pledges
In the run up to the general election, Labour’s manifesto included a five-point plan, which featured replacing business rates.
Exchequer secretary James Murray previously told parliament the Government was committed to a business rates system, which raises the same revenue but in a fairer way.
“The Government has pledged to level the playing field between the high street and online giants, incentivise investment, tackle empty properties and support entrepreneurship.
“The Government will work closely with all stakeholders, including those businesses that shoulder the greatest burden from business rate, as it develops the detail of its reforms. The Government will set out further details in due course.”
