Jump in business rate payments ‘will be final nail in coffin’ for many firms

High street businesses will face a surge in their business rate payments next year following new inflation data, with industry chiefs warning it will "undoubtedly be the final nail in the coffin for many firms".

It comes after the Office for National Statistics (ONS) revealed on Wednesday that the UK saw inflation remain at 6.7% last month.

The inflation reading is typically used to decide the increase in business rates – the property tax paid by businesses such as retailers, pubs and offices – for the following April.

The new figures therefore signals a £1.95 billion jump in these tax payments by businesses in England, according to real estate intelligence firm Altus Group. Property experts at Gerald Eve have predicted it will be closer to £1.7 billion.

It will mean particularly significant pressure on the retail and hospitality sectors, which have already come under pressure this year in the face of soaring costs and tighter consumer spending.

Inflation unchanged today - hotel prices and oil and diesel keeping it higher - fall.expected in Oct as energy price falls. But this means we now know business rate bills will rise by 6.7% in April - vital Chancellor freezes indexation and extends reliefs to support hospitality https://t.co/HBjk025kZs

— Kate Nicholls OBE (@UKHospKate) October 18, 2023

Last month, bosses from a raft of major retailers including Tesco, Marks & Spencer and IKEA called on the Government to scrap the planned inflation-linked rise in next month’s autumn budget.

On Wednesday, the British Retail Consortium (BRC) said retailers are set to face a £470 million increase in their business rate bills in April 2024 due to the inflation figures.

Helen Dickinson, CEO of the BRC, said: "This will inevitably put renewed pressure on consumer prices.

"As a result, retailers are publicly calling on the Chancellor to freeze the business rates multiplier, allowing them to keep driving down prices, and invest in new shops and jobs."

Experts have cautioned that customers are likely to face more price increases due to the tax rise.

Simon Green, Head of Rates at Gerald Eve, said: "If the Government were to introduce a 6.7% rise for every ratepayer, at a time when costs are already under enormous pressure, that risks causing further inflation as businesses will have no choice but to pass on the costs to customers.

"Clobbering high streets, retail parks, office blocks and logistics firms with these sky-high rises will also create a significant blow to the economic recovery that everyone wants to see."