The government is facing pressure to freeze business rates for next year to counter an expected rise of around £1bn for rates bills in England.
The retail sector is predicted to shoulder some £251.2m of this amount when the rates uplift takes effect in April next year, according to research from Altus Group.
CPI inflation was confirmed at 3.1% this week. The rates multipliers from the start of April next year are therefore set to increase to 51.4p for small businesses and 52.7p for larger ones.
Jerry Schurder, business rates policy lead at Gerald Eve, has called on the government to put a freeze in place at next week’s Budget.
“British business is being battered by crisis after crisis; the last thing it needs now is a massive tax raid,” he said, adding that the retail and hospitality sectors already face the “daily” challenge of staff shortages and supply disruptions.
He added: “We all know the country’s finances are in a parlous state after the pandemic, but an increase in the burden of tax will force more businesses to the wall, which will ultimately reduce the tax take.
“British business rates are already the highest tax of their type in the world and urgently need root-and-branch reform.”
Altus pointed out that the standard rate in England was 34.8p in 1990/91, when the levy was first introduced in its current form, with corporation tax standing at 34%. Although corporation tax is now 19%, there has been a near 50% increase in business rates, to 51.2p for the current financial year.
Robert Hayton, UK president of Altus, said that clients view the rates burden as a “disincentive to invest”.
Hayton said: “The chancellor must use the Budget to set stringent targets for the clearance of tens of thousands of outstanding challenges to facilitate the return of years of overpayments while also ending the ridiculous policy of increasing upwards the tax rates by inflation, which are now at an unsustainable level.”
Frustration is also mounting amid wider expectations that the government will again delay long-awaited, fundamental rates reform, despite a long-running review into the levy.
HM Treasury is still expected to publish the consultation at next week’s Budget, after it was delayed beyond the Budget in March, but it is widely expected that wholesale changes to the system will not be included.
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