Huge Business Rates Rise for Small Firms
More than 56,000 small businesses in England will face steep tax rises next year, research indicates.
Business rate increases will total £152m in April, a report from the BBC’s Zahra Hankir claims, putting a heavier burden on firms already reeling from rising inflation.
The prediction follows a drop-in retail sale last month as inflation hit its highest level in more than five years.
“For many shops, this may be the last straw,” said Helen Dickinson, chief executive of British Retail Consortium.
“Across the country, especially in economically deprived and vulnerable communities, the cost of failing to take action will likely be seen in yet more empty shops and gap-toothed High Streets,” she added.
Industry research shows that 37,364 small shops will see their business rates bills rise above inflation next April, with 30,198 small shops facing rises in their rates bills of between 10% and 14.99%.
Business rates are a property tax based on rental values. The rates increase annually, in line with September’s Retail Prices Index, a measure of inflation. The ONS this week said the RPI rate of inflation had reached 3.9%.
Meanwhile, the UK’s key inflation rate climbed to 3% in September, driven up by increases in transport and food prices. The pick-up in inflation raises the likelihood of an increase in interest rates – currently at 0.25% – in November, the first rise in a decade.
Brexit is driving inflation, import prices have risen (given the fall in the pound with prices rising faster than wages) and that is causing households to tighten their belts on spending, particularly on big ticket items.
The Treasury periodically changes the rateable value of business properties to reflect differences in the property market, a process known as revaluation.