English companies face £25bn business rates tax rise
Non-domestic premises in England such as pubs and restaurants will be hit by the double-digit headline rate of inflation, according to real estate adviser Altus Group.
Business rates tax is set through revaluations that periodically reassess and update tax liabilities to reflect changes in the commercial rental market, with the next revaluation coming into effect in England on 1 April 2023 based upon an estimate of open market rents on 1 April 2021.
While the revaluation will be revenue neutral, and will raise no extra money for the Treasury, overall business rates revenue for 2023/24 will still be increased by September’s CPI measure of inflation. CPI rose by 10.1% in the 12 months to September 2022, says Altus Group.
It forecasts that will signal that overall business rates revenue will rise by £2.72bn in England from next April without Government intervention.
“With more than one in 10 UK businesses now reporting a moderate-to-severe risk of insolvency, the time has come to end this ridiculous policy of annually increasing upwards rates revenue by inflation through a renewed focus on growth to drive local taxation revenues instead,” says Robert Hayton, UK President at Altus Group.
The Bank of England is said to expect inflation to start falling next year and has a target of 2% for inflation. However, even with inflation coming back down to target in around two years, Altus Group forecasts that business rates revenue will rise to £159.18bn over the next five years giving a cumulative total increase of £24.63bn without Government intervention.
