Retail, Leisure & Hospitality firms’ the length and breadth of England are set to pay an eye watering £2.66 Billion a year more in business rates next April, experts have today warned, through a ‘double whammy’ of tax hikes.
In the November 2023 Autumn Statement, the former Conservative Government announced the continuation of the Retail, Hospitality and Leisure Business Rates Relief Scheme for the 2024/25 financial year.
Analysis of official Government data by the commercial real estate intelligence firm Altus Group shows 252,414 eligible properties such as shops, restaurants, pubs, cafes, hotels and the like receive 75% relief on their business rates bill up to a total cash cap of £110,000 per business costing the Treasury £2.41 billion this financial year in England.
However, this was only a one-year commitment ending on 31 March 2025 and its continuation hasn’t been factored into Office for Budget Responsibility fiscal forecasts.
Whilst the Consumer Prices Index (CPI) headline measure of inflation for September, released on 16 October, will also determine business rate rises for the next financial year (2025/26) with the Uniform Business Rate (pence in the pound tax rate) increased annually in-line with inflation.
Whilst economists forecast CPI is set to fall from 2.2% in August to 1.9% in September, below the Bank of England’s target rate, the overall business rates burden across all property types and sectors would also increase by £545 million Altus Group added of which £250 million will be shouldered by the Retail, Leisure & Hospitality sectors.
“Despite the £22 billion ‘black hole’ in the nation’s public finances, the Chancellor must now prevent a cliff edge for the retail, hospitality and leisure sectors at her upcoming Budget whilst also delivering upon Labour’s manifesto commitment to lower the undue burden already placed on our high streets” said Alex Probyn, President of Property Tax, at Altus Group.
Local authorities in England will receive non-domestic rating income for 2024/25 of £26.27 billion. This is what authorities will collect after all the application of all mandatory and discretionary reliefs.
James Murray, the Exchequer Secretary, told Parliament last month that “the government is committed to a business rates system which raises the same revenue but in a fairer way. The government has pledged to level the playing field between the high street and online giants, incentivise investment, tackle empty properties and support entrepreneurship.
The government will work closely with all stakeholders, including those businesses that shoulder the greatest burden from business rates, as it develops the detail of its reforms. The Government will set out further details in due course” added Murray.