Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are being urged to use the emergency budget, which could come as early as next week after the Queen’s state funeral, to scrap a rise in the business rates tax next April that is pegged to September’s headline rate of inflation.
CPI rose by 9.9% in the 12 months to August 2022 which, if repeated in September, would see non-domestic buildings in England such as shops, pubs, restaurants, factories and offices facing a £2.66 billion business rates hike during the 2023/24 financial year according to the real estate adviser Altus Group.
The distribution of the business rates tax is set through revaluations which periodically reassess and update tax liabilities to reflect changes in the commercial rental market. The next revaluation comes into effect on 1st April 2023 in England based upon an estimate of open market rents on 1st April 2021.
The Government say that this will help ensure that, where there have been shifts in economic activity which have driven changes in market values, these changes will be reflected in tax liabilities. But, despite the revaluation, overall business rates revenue for 2023/24 will still be increased by September’s CPI measure of inflation.
Robert Hayton, UK President at Altus Group, said, “it would be unthinkable for a pro-business prime minister who campaigned to cut taxes to then hike business rates” adding “the time has come to end the ridiculous policy of annually increasing upwards rates revenue by inflation through a renewed focus on growth to drive local taxation revenues instead.”
Whilst the new ‘Energy Price Guarantee’ for households and businesses is expected to curb peak inflation by 4 to 5 percentage points, the guarantee doesn’t come into effect until 1st October.
Business rates are devolved to Scotland, Wales and Northern Ireland.
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