September’s headline rate of inflation is set to cause more business rates increases in 2020, according to calculations from real estate advisers Altus Group.
The firm said the 1.7% uprating for inflation will add an additional £536m to the overall gross business rates burden. As a result, the “embattled” retail sector could face a £136.92m rates hike in April next year, putting English high streets “under further pressure”.
The ONS’ Consumer Prices Index (CPI) measure of inflation determines business rate rises for the following financial year (2020/21) with the Uniform Business Rate (pence in the pound tax rate) uprated annually for inflation.
The current standard rate of tax for business rates in England rose to 50.4p on 1 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.
Alex Probyn, UK president of expert services at Altus Group, said: “The compound effect of annual inflationary rises are completely unsupportive of UK businesses. Revenue from rates has risen by almost a third in England, up by £6.04bn 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.”
He added: “Business 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 British Retail Consortium, 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.”