A leading investment management group, Colliers, has warned that the anticipated increase in UK business rates next spring will have severe repercussions for the economy if no action is taken. According to John Webber, Head of Business Rates at Colliers, the rise of around £1.74 billion in business rates in April 2024 will negatively impact all sectors, particularly retail businesses on the high street.
Business rates are calculated based on inflation and the previous September’s Consumer Price Index (CPI) figure. With the latest CPI figures showing a rate of 6.7%, the revenue generated from this tax is expected to increase from approximately £26 billion in the 2023/2024 fiscal year to £27.74 billion in 2024/2025, starting in April.
Webber emphasizes the urgent need for the government to freeze the business rates multiplier, as Chancellor Jeremy Hunt did for the current tax year. This would maintain the multiplier at 51.2p for every £1 of a commercial property’s rateable value and 49.9p for small businesses. Without intervention, all sectors of the economy will face an unsustainable tax burden. The retail sector, for instance, already contributes around 21% to the total business rates tax bill and will see a further £366 million increase in rates bills from April. Additionally, as business rates reliefs come to an end, the sector will face even greater financial strain.
In contrast, the logistics/manufacturing sector contributes 26% to the total business rates tax bill and has already experienced significant rate hikes this year due to a 2023 revaluation. Colliers estimates that the sector will face an additional £453 million increase in rates bills from April. The Amazon London distribution park in Tilbury, for example, is projected to see its rates bill rise from approximately £4.7 million in 2023 to £6.75 million in April 2024, unless there is an announcement regarding rate freezes or relief.
Webber expresses disappointment in the lack of attention given to the issue of business rates by both the Conservative and Labour parties at their respective conferences. With an imminent rise of over £1.74 billion next year, he fears that both parties are neglecting this critical matter. Urgent change is necessary to address the pressing issue of business rates.
Useful links:
1. Introduction to Business Rates
2. Colliers Business Rates Services
