Chancellor Jeremy Hunt has once again been urged to freeze business rates again, following warnings that a multi-billion hike in bills could leave many small firms “on the brink”.
Last autumn the chancellor announced a major support package worth £13.6 billion to help businesses still recovering from the pandemic, which included freezing business rates, as well as increasing the discount for retail hospitality and leisure businesses from 50 per cent to 75 per cent for 12 months, capped at £110,000 per firm.
However, business rates are now set to increase in April 2024 under the government’s “multiplier”, which is tracked to inflation in September, as measured by the consumer price index.
An evaluation by UKHospitality suggests that increasing business rates by inflation could increase bills for the hospitality sector by £220 million next year. This would come on top of an additional £630 million cost from rates relief ending, leaving the hospitality and licensed on-trade sector facing an additional bill of £850 million in the new financial year.
The industry argues that government support this year was vital to keeping many businesses afloat during the energy and cost of living crisis, and that ending this could see many smaller firms closing.
Kate Nicholls, chief executive of UKHospitality, said:
“The looming business rates hike facing hospitality businesses is a ticking time bomb that has the potential to cause as much damage next year as the energy crisis. The ending of current business rates relief next April could mean an additional £630 million hit, while an inflationary increase to rates adds a further £220 million. Together, it’s an almost billion-pound bill that could put businesses on the brink.
“The current business rates relief package has been critical for businesses to navigate cost pressures across energy, food and drink, as well as workforce pressures, and has kept small, independent businesses afloat. These are the ones struggling the most, with independent business markedly less confident in their future prospects.
“We need to see urgent action from government to avoid this upcoming bill, with firm commitments that there will be no inflationary increase to the total sum of business rates, and that business rates relief will continue for hospitality businesses.
“Inaction is the difference between firms scaling up, investing and driving economic growth and recovery, or accelerating price rises for consumers — or even worse, businesses shutting their doors for good.”