High street businesses in the UK could face close to a £2 billion increase in business rate payments in April next year after September’s inflation rate remained at 6.7%.
Business rates – the property tax paid by businesses such as retailers and pubs – are set in April when the financial year resets and the increase is often decided by the inflation figure in September.
Industry chiefs have warned that the hike will “undoubtedly be the final nail in the coffin for many” businesses.
Wednesday’s inflation figures would signal a £1.95 billion jump in rates, according to research from Altus Group (TSX:AIF), but property experts at Gerald Eve believe this figure may shrink slightly to £1.7 billion.
Retailers are expected to face a £470 million increase, while hospitality venues are expected to see a £234 million jump, amplified by an additional £630 million in payments from when relief for the sector comes to an end.
UKHospitality boss Kate Nicholls has called for support from the government as the industry faces an £864 million setback next year, a headwind she believes will be “insurmountable for many”.
Nicholls said in a statement online: “Today’s figures finally confirm the bleak picture facing hospitality businesses next April. It would be particularly perilous for small, independent businesses, for which ongoing relief measures are a lifeline at a challenging time.
“It’s imperative that the Chancellor takes clear action at the Autumn Statement to extend the current relief measures for a further year to protect the vital community assets that make up the UK’s vibrant hospitality sector.”
UKHospitality called for an extension of the 75% relief package for a further year, an increase in the cap of relief to £2 million per business and a freeze in the business rates multiplier. It believes that, should support be given, the industry can grow at an annual rate of 6% over the next five years.