Retailers across Britain face a £2.3 billion tax hike next April as many voice fears of price rises.
The tax increases are set to rise by an average of £465 million per year for the next five years according to new research.
As import prices are on the rise following Brexit, and the rising Living Wage begins to come into effect, retailers have warned of potentially disastrous consequences of the business rates hike, ahead of Philip Hammond‘s autumn statement this week.
Business rates are based on the value of commercial property as well as the annual rate of inflation. Retailers have warned that the levy is overwhelming them as they rely so heavily on property, on which the majority spend more tax on than they do for corporation tax.
Controversially the government pushed back the commercial property revaluation by two years, deviating from the usual five-year recurrence. They stated that it would create uncertainty among businesses, this will make the changes even more harshly felt when they come into effect.
“The retail sector is facing a significant shift in structural dynamics, with most reporting challenging conditions ahead,” the chief executive of property agent CVS Mark Rigby said.
“Add to the mix the already ‘lethal cocktail‘ of increased operating costs from the national living wage and apprenticeship levy, and a near half a billion pounds increase in business rates per year for the next five years is simply unsustainable.
“Something will have to give – whether that‘s store closures or even higher prices at the till.”
More concern comes over the government‘s plans to stop any business rates appeals which have a margin of error of less than 15 per cent, purportedly costing small businesses £700 million in the next five years.
Policy director at the Federation of Small Businesses Martin McTague said: “We believe this clause simply fails the fairness test and could result in the door being shut on small businesses who want to correct inaccuracies in valuations and reduce their rates bills.
“This research shows that businesses that are already struggling could be pushed into insolvency, with smaller firms particularly at risk.”