Business rates will soar for all but the smallest occupiers in a “massive hit to the high street”.
In his Autumn Statement yesterday, the chancellor said the small business rates multiplier would be frozen for another year, and the 75% retail hospitality and leisure relief extended until 2025.
However, larger businesses will see their rates rise by 6.7% to 54.6p in the pound. “It is not possible to continue with temporary support measures forever,” Jeremy Hunt said.
British Property Federation chief executive Melanie Leech retorted that even the measures to provide relief for small businesses “only scratch the surface”.
“The chancellor should have gone further and frozen the multiplier for all businesses to prevent the unsustainable burden on the high street rising even higher.”
Colliers’ business rates expert John Webber said: “The chancellor’s actions will be a massive hit to the high street.”
Although most businesses in the retail and hospitality sectors have benefited to some extent from the 2023 revaluation, they now face the highest rates bill in history.
Helen Dickinson, chief executive at the British Retail Consortium, said: “The chancellor has poured fuel on the fire spreading across our high streets with a tax hike on shops and other businesses.”
Vivienne King, chair of the Shopkeepers’ Campaign, added: “In the current economic climate, raising the standard multiplier by 6.7% should never even have even been considered. Business rates bills are already far too high, and they are now at their highest ever level. The Conservatives, who promised to reduce them for retail in 2019, have fundamentally broken their promise.”
Altus Group worked out that the hike would hit 219,410 commercial premises, which collectively will have to pay an additional £1.66bn in business rates.
Tim Attridge, head of rating at CBRE UK said: “The lack of support for these businesses is both surprising and hugely disappointing. The lack of intervention will have a detrimental impact on the retail market and stifle store growth strategies, as well as fuelling a potential increase of business casualties in the face of these rising costs.”
The freezing of the small business rates multiplier, for those properties with a rateable value of less than £51,000, will save just £330m in comparison.
It added that for Harrods that would mean a hike of £617,500 to a total bill of £18m each year. Selfridges on Oxford Street would see its rates bill rise by £577,000 to £16.8m.
Colliers said high street fashion retailer Zara’s rates would rise from £15.29m this year to £16.3m next year, while Next will see a rise from £97.3m to £103.6m, and H&M’s will rise from £33.5m to £35.7m. Primark’s store on Birmingham High Street will increase from £681,000 to £725,000 next year.
Webber added: “In his rush to save his job, the chancellor has ignored the calls of the BRC and UK Hospitality and seems to have forgotten that the larger retail and hospitality companies are the main employers in their sectors.”
He said the rise would have “a dire impact and certainly dampen expansion and growth plans”, adding: “For some businesses it might be the last straw.
Raising rates by September’s inflation figure is also out of step with the current fall in inflation, which now stands at 4.6%. “The situation is even more bizarre,” says Webber. “Inflation may be around 3% next April, but we would see such businesses tied to the 6.62% figure for the year.”
Webber’s verdict was scathing. “The chancellor spoke of creating a tax regime pro-business and designed for further ‘levelling up’. The failure to freeze the larger multiplier fundamentally means substantial business rates rises for the UK’s biggest businesses from 2024. Nowhere else in Europe do businesses pay approaching 60% of the rental of their premises in property taxes and at current levels this is unsustainable and deters new investment in businesses, despite the chancellor’s claims.”
“This is a damning indictment for the Conservative government who have failed their manifesto promise to reduce this tax.”
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
