A 2.4% increase in inflation will add an additional £186.45m to retailer’s business rates bill next April.
September’s Consumer Price Index (CPI) measure of inflation, announced today at 2.4%, will determine business rate rises in England next April.
The overall business rates bill will increase by £728.2m in England, real estate adviser Altus Group suggests, and £186.45m of that increase will be shouldered by the embattled retail sector.
Business rates bills are calculated by multiplying the property’s rateable value – an estimation of the open market annual rent on 1 April 2015 – by the multiplier.
The multiplier represents as a percentage, 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.
The standard multiplier, which applies to 492,165 larger premises in England that have a rateable value of £51,000 and above, will rise to 50.5p, from April next year. It will be the first time the tax rate for business rates has gone above 50%. So, a business with a rateable value of £51,000 will have a rates bill of £25,755 before any relief is applied.
When the national business rates system was introduced in 1990, the multiplier was set at 34.8p.
Robert Hayton, head of UK business rates at Altus Group, said: “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, an increase of 19.4%.
Helen Dickinson, chief executive of the British Retail Consortium, said: “These figures confirm that the retail industry, which is under significant pressure from public policy and a consumer and technology-led transformation, will face yet another eye-watering rise in business rates next April. The burden of the current business rates system, which is in urgent need of reform, is leading to store closures and hindering the successful reinvention of the retail industry.
“Ministers need to act to address this £180m increase in retailers’ already unsustainable business rates bill, along with other public policy burdens that retailers are struggling to absorb the cost of.
“We need a freeze in the business rates multiplier until the next revaluation to help save shops, protect jobs, and future-proof retail, and to give the Government time to work with industry to reform the business tax system and make it fit for purpose in the 21st century.”