Business rates experts at Colliers despair as the Chancellor fails to support the high street and only freezes the multiplier for small businesses – resulting in massive 6.62% business rates hike next April for most retailers.
In the Autumn Statement the Chancellor has yet again failed to support the High Street through his business rates policy.
The Chancellor announced he would support smaller businesses by:
- Freezing the multiplier for another year (currently 49.9p for small businesses).
- Extending the 1-year 75% discount on business rates bills up to £110,000 per business.
However, nothing was said to support the larger retail and hospitality businesses who will still see an eyewatering 6.62% rise on their business rates bills next April.
John Webber Head of Business Rates at Colliers commented: “ By adding the CPI inflation figure to the existing multiplier he has grabbed even more cash from hard pressed retailers. For these businesses, the multiplier will be 54.6p – meaning business rates is heading towards being a 60% tax!
“The Chancellor’s actions will be a massive hit to the high street. Although most businesses in the retail and hospitality sectors have benefited to some extent from the 2023 Revaluation, the sectors are still under pressure facing higher occupational costs across the board as energy, employment and insurance costs soar- yesterday’s rise in the national living wage only adds to the pressure.”
Webber continued: “In his rush to save his job, the Chancellor has ignored the calls of the BRC and UK Hospitality and seems to have forgotten that the larger retailer and hospitality companies are the main employers in their sectors. Hitting them with a 6.62% rise in their rates bills next April will have a dire impact and certainly dampen expansion and growth plans. For some businesses it might be the last straw. The situation is even more bizarre when we see the current inflation figure has already fallen to 4.6% and may be around 3% next April, but we would see such businesses tied to the 6.62% figure for the year.”
As way of illustration, Colliers looked at Zara’s rates liability (bills) which it estimates will rise from £15.29 m this year to £16.3 million next, Next which will see a rise from £97.3 million to £103.6 million and H& M which will rise from £33.5 million to £35.7 million next April also. In Oxford Street, Selfridges’ rates bill will increase by over £0.55 million to an eye watering £9.503 million per annum. The increases are not confined to Central London: Primark in High Street Birmingham will see its rates bill increase from £681,000 to £725,000 next year.
“The Chancellor’s failure to support those retailers and hospitality companies with multiple stores or outlets, will lead to a hardship and do nothing to stem the trail of bankruptcies we have seen from such chains in recent years from Toys r Us and Carluccio to most recently Wilko. Last year 67,000 retail workers lost their jobs and 5,5000 retail stores shut shop. The lack of support is astounding.” “ It’s pointless worrying about Capital Allowance benefits on empty shops” says Webber.
Webber continues, “Aside from freezing the multiplier for small businesses, the government has also yet again failed to fulfil its election manifesto and introduce proper business rates reform. None of the following matters, that we have been campaigning for have been addressed:
- Reduce The Multiplier (the UBR used to calculate rate bills) to around 34 p in the £.
- Reform of the Sticking Plaster Reliefs System and Remove Business Rates Deserts, where no business rates are paid
- Extend Empty Property Rates Relief to Twelve Months and to Other Sectors
- Introduce Annual Revaluations
- Review Rating of Plant and Machinery
- Improve Transparency from the VOA
- Reform Unfriendly and Ill-Equipped Appeal System
- Address Rogue Rating Advisors by Regulating the Ratings Industry
He added “The Chancellor spoke of creating a tax regime pro-business and designed for further “levelling up”. The failure to freeze the larger multiplier fundamentally means substantial business rates rises for the UK’s biggest businesses from 2024. Nowhere else in Europe do businesses pay approaching 60% the rental of their premises in property taxes and at current levels this is unsustainable and deters new investment in businesses, despite the Chancellor’s claims.
This is a damning indictment for the Conservative Government who have failed their manifesto promise to reduce this tax.”