Retailers will have to pay an extra £137m next year after it was confirmed that inflation costs will increase by 1.7% in 2020/21.
The British Retail Consortium (BRC) says the latest business rates rise – which is based on the Consumer Price Index (CPI) figure for September – means retailers will be hit with an additional £137m.
The current standard rate of tax for business rates in England rose to 50.4p on 1 April for 2019/20, the first time the tax rate for business rates in England has gone above 50%. When the national business rates system was introduced in 1990, the multiplier was set at 34.8p.
Meanwhile, real estate adviser Altus Group, said the increase in inflation will see business rates bills next year increasing by £536m across all businesses in England.
Altus Group also predicts that the retail sector will face a £136.9m increase, pubs will be hit with an additional £12.8m and restaurants and hotels will both face increases in bills of £9.7m and £14.4m respectively.
The office sector will also be hard hit with an inflationary rise of £126m, while factories would have to stump up an extra £70.4m.
“The compound effect of annual inflationary rises are completely unsupportive of UK businesses”, Alex Probyn, UK president of expert services at Altus Group said.
“Revenue from rates has risen by almost a third in England, up by £6bn a year, during the last decade. Firms would greatly benefit from respite from increasing property taxes that are both uncompetitive, and the highest across Europe. Businesses want and expect the chancellor to deliver a pro-business autumn budget amid these uncertain times and Sajid Javid could do that, in part, by being the first chancellor in history to scrap the inflationary rise next year.”
Dominic Curran, property policy advisor at the BRC, said: “Today’s CPI announcement means retailers will have to cough up an extra £137m from April. Already, while retail accounts for 5% of the economy, it pays a massive 25% of all business rates. This £137m increase will reduce the ability of retailers to invest in their business, their staff and their shops. The chancellor must take action on rates in the forthcoming Budget and scrap ‘downwards transition’, which takes £1.3bn from retailers and uses most of it to subsidise rates in other industries. Meanwhile, with the retail industry facing store closures and jobs losses, the Government should freeze the impending business rates increase.”