Colliers revises estimates following CPI* figure announced today of 6.7 %
Business rates bills will rise by a total of £1.74 billion next April, to around £27.74 billion, giving unsustainable rises to all sectors of the economy, says John Webber, Head of Business Rates at Colliers, unless the Government steps in and intervenes.
Rates bills rise in line with inflation and are based on the CPI figure for the previous September. With CPI announced today at 6.7 % for September 2023, the total tax take from this tax will rise from around £26 billion in 2023/4 to £27.74 billion 2024/5 from next April.
This is unless the government steps in and freezes the business rates multiplier as Chancellor Jeremy Hunt did for the current tax year, keeping it at 51.2p for every £1 of a commercial property’s rateable value, and 49.9p for small businesses.
Without government intervention, as John Webber points out, all sectors will be penalised by this unsustainable tax:
- The retail sector pays around 21 % of the total business rates tax bill and will see its rates bills rise by around £366 million in April. The sector will be hit even harder as business rates reliefs come to an end at the same time. This could have a deep impact on retail businesses in the high street.
- The logistics/manufacturing sector also pays a hefty 26% of the total business rates tax bill and has seen steep rises in its rates bills this year already, as a result of the 2023 Revaluation. Colliers estimate the sector will see its rates bills rise by around another £453 million in April. Combined with the revaluation increases, Colliers estimates the Amazon London distribution park in Tilbury, for example will see its rates bill rise from around £4.7 million in 2023 to £6.75 million from April 2024- a massive over £2 million increase- unless something is announced.
- Similarly, the offices sector is expected to face an extra £401 million in its total rates bill. Barclays Bank in 1 Churchill Place in Canary Wharf, for example, will see its rates bills rise from around £9.1 million this year to £9.8 million in April 2024. At a time when companies are considering their office space requirement, this is certainly not going to help the “case” for investing in office space.
According to Webber such rises are unsustainable. “All sectors are suffering from increased costs, whether from increased wage bills, materials or energy costs. They cannot cope with the hike in rates bills too. Higher occupation costs will only dampen expansion and growth plans and for many businesses might be the last straw. The government must do something.
Freezing the multiplier for 2024/5 is the first step, but only really papers over the issues. Ultimately, we need proper business rates reform, primarily by the government rebasing the multiplier to a level that businesses can afford- say 34p in the £ and reforming the sticking plaster relief system- so that every business contributes something for their local amenities.”
“It is desperately disappointing that at neither the Conservative nor the Labour party conferences was there any real mention of what to do on “the business rates question. With rises of over £1.74 billion looming next year, we are fearing a “head in the sands” approach yet again by both parties. This clearly needs to change- and soon.”