August 8, 2022

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UK companies face ‘iceberg’ of business rates next year

2 min read

Companies in England are heading for an “iceberg” next spring with business rates set to rise by up to £3bn because of soaring inflation, industry groups have warned.

They said those businesses that gain from an upcoming revaluation could see those benefits eroded as a result, while those that lose out will see their losses amplified.

Business rates, the taxes paid by companies based on the rental value of the property they occupy, rise at the start of each tax year based on consumer price inflation the previous September.

The annual uplift has been cancelled for the past two years to help businesses weather the coronavirus pandemic. But the Bank of England is forecasting inflation could reach 11 per cent later this year, potentially setting up a large rise in rates in 2023.

Louise Hellem, director of economic policy at the CBI, called on the next Conservative administration to ease the burden: “There isn’t a moment to lose”, she said.

“Unless urgent steps are taken to ease the business rates burden, firms are facing a hike in their bills in April of around 10 per cent just from inflation,” she said. “This is an iceberg threatening businesses already reeling from soaring energy costs post-pandemic.”

Craig Beaumont, chief of external affairs at the Federation of Small Businesses, raised the issue with chancellor Nadhim Zahawi at a meeting last week as he called for help with “pre-profit taxes”.

“This coming year small businesses will face a business rates double whammy of inflation and a revaluation, with some companies potentially facing huge hikes of 200 per cent,” he said.

Next year will see the first reappraisal of commercial property values since 2017. Many occupiers are expecting big reductions given that rents have fallen steeply in many areas.

However, by law revaluations have to be fiscally neutral to the Treasury in real terms, meaning that without intervention the overall tax take in fiscal 2023 would broadly be the 2022…

2022-07-31 11:00:28

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