The Consumer Prices Index (CPI) measure of inflation for September, released by the Office for National Statistics this morning, determines business rate rises for the following financial year (2022/23) with the Uniform Business Rate (pence in the pound tax rate) increased annually in-line with the headline rate of inflation.
In 1990/91, 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%. Whilst Corporation tax today stands at 19%, in contrast, the standard rate of tax for business rates for the current financial year for 2021/22 is 51.2p, a near 50% increase, resultant from compound inflation.
Today’s headline rate of inflation of 3.1% signals that gross business rates bills next year from 1st April for 2022/23 will increase by £1.04 billion in England according to forecasts from the real estate adviser Altus Group without Government intervention at the Budget.
Financial COVID support measures are also due to come to an end next year with occupied retail, leisure and hospitality premises in England currently receiving £6.1 billion of business rates relief for 2021/22 as the full holiday was extended until the end of June 2021 with the relief then continuing at reduced and capped levels until 31st March 2022.
Robert Hayton, UK President of Altus Group, Britain’s largest ratings advisory, said “our clients tell us that the rates burden act as a disincentive to invest.” He added “The Chancellor must use the Budget to set stringent targets for the clearance of tens of thousands of outstanding Challenges to facilitate the return of years of overpayments whilst also ending the ridiculous policy of increasing upwards the tax rates by inflation which are now at an unsustainable level.”