Business rates are an “iceberg” threatening the industry, with inflation expected to boost the bill by £3bn, the CBI has warned.
Next year will see the first reappraisal of commercial property values since 2017. Many occupiers are expecting big reductions given that rents have fallen steeply in many areas.
However, by law, revaluations have to be fiscally neutral to the Treasury in real terms, meaning that without intervention the overall tax take in fiscal 2023 would broadly be the 2022 figure plus an inflation uplift.
Louise Hellem, director of economic policy at the CBI, said: “Unless urgent steps are taken to ease the business rates burden, firms are facing a hike in their bills in April of around 10% just from inflation.
“This is an iceberg threatening businesses already reeling from soaring energy costs post-pandemic.”
She has called on the next Conservative administration to ease the burden: “There isn’t a moment to lose”, she said.
Craig Beaumont, chief of external affairs at the Federation of Small Businesses, raised the issue with chancellor Nadhim Zahawi at a meeting last week as he called for help with “pre-profit taxes”.
“This coming year small businesses will face a business rates double whammy of inflation and a revaluation, with some companies potentially facing huge hikes of 200%,” he said.
Altus Group said that, based on the Bank of England’s inflation forecast, the tax take from business rates in England could rise by almost £3bn in 2023.
The CBI has calculated that property taxes in the UK are four times higher than Germany and 50% above the G7 average as a proportion of GDP.
