Businesses facing extra £1.56 billion in rates bills - expert 

Real estate property experts Colliers have urged the government to act fast on business rates as businesses are forecasted to pay an extra £1.56 billion in rates bills next April.

The move will give unsustainable rises to all sectors of the economy, says John Webber (pictured), head of business rates at Colliers.

Rates bills rise in line with inflation and are based on the CPI figure for the previous September.

With CPI announced at 6.7 per cent for August, Colliers are expecting to see CPI figures at around 6 per cent for September 2023, with the result  the total tax take from this tax will rise from around £26 billion in 2023/4 to £27.56 billion 2024/5 from next April.

This is unless the government steps in and freezes the business rates multiplier.

Last year, Chancellor Jeremy Hunt froze the multiplier 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.

Forty-four major British retailers have already written to the Chancellor ahead of his Autumn Statement, urging him to do the same again, otherwise they estimate an extra £400m will be added to the retailers cost base next year, particularly as Covid related reliefs come to an end.

However, retail is not the only sector that will be penalised by this unsustainable tax. The logistics/manufacturing sector now pays 26 per cent of the total business rates tax bill and has seen steep rises in its rates bills, as a result of the 2023 Revaluation.

With inflation at 6 per cent, Colliers estimate the sector will see its rates bills rise by around £406 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 £6.7 million from April 2024- a massive £2 million increase- unless something is announced.

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.”

Colliers has drawn up a manifesto for reform, the main components of which are:

• The government should rebase the Multiplier to a level that businesses can afford
• Reform the sticking plaster reliefs system
• Introduce annual revaluations
• Reform the appeal system and demand transparency from the VOA. 

Colliers believes the current system needs to transparent, easy to access for all and allow appeals to be resolved in 12 months, so that businesses can get on with what they do best- running their businesses.

Webber continued, “In its 2019 Manifesto, the Conservative Party promised, “To cut the burden of tax on business by reducing business rates. This will be done via a fundamental review of the system.“ With rises of over £1.5 billion looming next year, it clearly has not fulfilled this promise. We urge the Chancellor to make a statement and to do it soon.”