Inflation has hit 10.1% for the second time this year, prompting fears of a £3bn hike in business rates.
Figures from the Office for National Statistics show that inflation climbed above 10% in September after a slight dip to 9.9% in August. Markets had been expecting a more modest rise to 10%.
The last time the figure was higher was 1982.
The rise will mean even bigger challenges for the industry, potentially translating into a £3bn hike in business rates from April, with an additional £1.7bn hit for retail, leisure and hospitality.
The tax on all commercial properties rises in line with the inflation data for September, which the ONS revealed this morning.
Jerry Schurder, business rates policy lead at Gerald Eve, said: “Businesses are quaking in their boots at the risk of the new chancellor forcing up business rates in line with inflation.”
An additional £1.7bn hit to more than 250,000 businesses in the retail, leisure and hospitality sectors is on the way unless the existing 50% discount for those businesses is extended.
In the last two autumn Budgets, then chancellor Rishi Sunak froze uniform business rates at 49.9p per pound of each property’s rateable value assessment. But Schurder pointed out that the loss of revenue to the Exchequer was relatively modest as inflation was running at 0.5% in September 2020 and 3.1% in 2021.
This time that would not be the case, with a rise in business rates looking likely as new chancellor Jeremy Hunt seeks to balance the books.
But Schurder warned against the move. “The prime minister claims that her policies are designed for ‘growth, growth and growth’ but further business failures and shop closures will result unless the UBR is frozen again.”
The last time the UBR increased by as much as 10.1% was in 1991, when it rose by 10.9%.
In the mini-Budget last month, Kwasi Kwarteng made no mention of business rates.
That mistake could not be made again, Schurder said. “Businesses are dependent on the new chancellor stepping up to the plate and immediately announcing a UBR freeze.”
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