British businesses could face an extra £1bn tax bill next year unless the Government freezes business rates, experts have warned.
Figures from the Office for National Statistics released on Tuesday, showed that Retail Price Inflation (RPI) was 3.9pc in September. This figure is the one that will be used to set new business rates values in April, on top of changes to the system that came in earlier this year.
But the British Retail Consortium (BRC) and other firms said without intervention to freeze business rates, retailers and other firms would face a rates rise twice as large as last year.
Consultancy Gerald Eve said that the total increase to business rates across all sectors could be as much as £1bn in April if the 3.9pc increase goes ahead, based on the £25.7bn paid in rates in the current financial year. The rise could add another £273m to retailers’ bills alone.
Helen Dickinson, chief executive of the BRC, commented: “The consequences of today’s RPI figures could be severe for many shops in a precarious position and struggling to survive. Consumers, already seeing household incomes eroded, will face further misery as the pound in their pocket buys them less at the checkout.” She added that for many shops, the rise could be “the last straw.”
“Across the country, especially in economically deprived and vulnerable communities, the cost of failing to take action will likely be seen in yet more empty shops and gap-toothed high streets,” she warned.
Many businesses had already been affected by a revaluation of properties that came into force in April, which was intended to reduce business rates for many companies.
In reality, however, because the reduction is phased over a five-year period, many firms are still paying a higher value of rates while the transition period continues.