Rise in inflation signals business rates rises of £160m next April

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Rise in inflation signals business rates rises of £160m next April
While retail, leisure and hospitality firms have been given a one-year business rates holiday, this is set to end on March 31 just before the new rate kicks in at the start of the new tax year on April 1.
// ONS says CPI inflation rose to 0.5% in September, up from 0.2% in August
// The September CPI figure is used to decide the annual increase in business rates in England
// Altus Group predicts business rates to rise by almost £160m in April

A rise in UK inflation last month has prompted fears that business rates bills in England will rise by almost £160 million next April.

New official figures from the ONS indicates that the Consumer Prices Index (CPI) inflation rose to 0.5 per cent in September, up from 0.2 per cent in August.

It came as the Eat Out to Help Out discount scheme finished at the end of August, which had helped push inflation to its lowest level for nearly five years.


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“The official end to the Eat Out to Help Out scheme meant prices for dining out rose during September, partially offsetting the sharp fall in inflation for August,” ONS deputy national statistician Jonathan Athow said.

“Air fares would normally fall substantially at this time due to the end of the school holidays, but with prices subdued this year, as fewer people have been travelling abroad, the price drop has been less significant.

“Meanwhile, as some consumers look for alternatives to using public transport, there was an increased demand for used cars, which saw their prices rise.”

The September CPI figure is used to decide the annual increase in business rates in England.

While retail, leisure and hospitality firms have been given a one-year business rates holiday, this is set to end on March 31 just before the new rate kicks in at the start of the new tax year on April 1.

In the 1990/91 tax year, when business rates in their current form were first introduced, the standard rate of tax for business rates in England was 34.8p, a rate comparable to other tax rates at that time. UK corporation tax was 34 per cent.

While corporation tax today stands at 19 per cent, in contrast, the standard rate of tax for business rates for the current financial year is 51.2p, a near 50 per cent increase and due to compound inflation.

According to forecasts from the real estate adviser Altus Group, today’s CPI signals that gross business rates bills next year will increase by £159.42 million in England, of which £50.12 million will be shouldered by the embattled retail sector.

Further analysis from Altus Group found that the Chancellor’s winter plan missed the opportunity to deliver discerning targeted support to help with business rates bills next year.

It’s thought that 358,264 occupied retail, leisure and hospitality premises would return to full business rates on April 1 after having had one-year, £10.13 billion holiday in England due to the Covid-19 pandemic.

“Government has an opportunity to disprove detractors, showing that the business rates system is in step with reality ensuring appeals to reduce property values because of Covid are accepted quickly, and at the same time, injecting additional targeted financial support to where it is needed most,” Altus Group head of UK business rates Robert Hayton said.

Business rates are devolved to Scotland, Wales and Northern Ireland.

with PA Wires

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