September’s Consumer Prices Index (CPI) measure of inflation, the headline rate of inflation, signals a £1.95 billion business rate rise in England next April for the 2024/25 financial year without intervention from the Chancellor at his upcoming Autumn Statement next month, experts have today warned.
At the Autumn Budget in 2017, the Government switched the annual uplifting of business rates for inflation from the Retail Price Index (RPI) to the lower headline rate of inflation (CPI) in the preceding September from 1st April 2018.
CPI rose by 6.7% in the 12 months to September 2023, unchanged from August. The commercial real estate intelligence firm Altus Group forecasts that September’s headline rates of inflation will now signal that gross business rates bills will rise by £1.95 billion in England next April, of which £415 million will be shouldered by the embattled retail sector which has shed around 60,000 jobs so far this calendar year.
Last year’s Autumn Statement which froze rate rises also saw those businesses occupying retail, leisure and hospitality premises granted a 75% business rates discount up to a cash cap of £110,000 per business. This discount was only a one-year commitment to be applied for 12 months from 1st April 2023 and is set to expire on 31st March 2024 with Altus Group forecasting the cost of that discount at £2.37 billion warning now of a ‘double whammy’ tax rise in business rates of £4.32 billion next April.
Alex Probyn, Global President of Property Tax at Altus Group, urged the Chancellor to use his Autumn Statement on 22nd November to act again saying “the Chancellor must not only set stringent targets for the clearance of tens of thousands of outstanding Challenges to facilitate the return of years of overpayments but also permanently end the policy of increasing tax rates by inflation whilst maintaining the discount.”
Probyn added, “our clients tell us that the business rates burden is a disincentive to invest and are already at an unsustainable level”.