Today’s headline rate of inflation is set to cause yet more business rates increases, putting the high street under further pressure.
September’s Consumer Price Index (CPI) measure of inflation determines business rate increases for the following financial year (2020/21) with the Uniform Business Rate (pence in the pound tax rate) up-rated annually for inflation.
The current standard rate of tax for business rates in England rose to 50.4p on 1st April 2019 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.
Today’s headline rate of 1.7% signals that gross business rates bills for 2020/21 will increase by £536.03 million in England, according to our calculations.
The embattled retail sector will face a £136.92 million increase with pubs shouldering a £12.77 million hike, whilst restaurants and hotels will both face increases in bills of £9.71 million and £14.41 million respectively.
The office sector will also be hard hit with an inflationary rise of £126.09 million, with factories having to stump up an extra £70.44 million.
Alex Probyn, UK President of Expert Services at Altus Group said: “The compound effect of annual inflationary rises are completely unsupportive of UK business. Revenue from rates has risen by almost a third in England, up by £6.04 billion 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. Business wants and expects 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.”