Colliers, a prominent investment management group, has sounded the alarm over a significant increase in UK business rates set to take effect next spring. John Webber, Head of Business Rates at Colliers, labeled this impending rise as «unsustainable» and called for government intervention to avert its potential impact on various sectors, especially retail businesses on the high street.
Business rates in the UK typically increase in line with inflation and are determined based on the CPI figure from the previous September. The most recent CPI figures, indicating a 6.7% rise, forecast an increase in revenue from this tax, from approximately £26 billion in 2023/4 to £27.74 billion in 2024/5, starting from April.
Webber stressed the need for government action, similar to the freeze initiated by Chancellor Jeremy Hunt for the current tax year. This freeze maintained the business rates multiplier at 51.2p for every £1 of a commercial property’s rateable value and 49.9p for small businesses. Without such intervention, he warned that all sectors would bear the brunt of this «unsustainable tax.»
The retail sector, which already contributes around 21% of the total business rates tax bill, faces an additional £366 million in rates bills in April. This coincides with the conclusion of business rates reliefs.
Meanwhile, the logistics and manufacturing sector, responsible for a substantial 26% of the total business rates tax bill, has already experienced significant increases in rates bills this year due to the ‘2023 Revaluation.’ Colliers estimates that this sector’s rates bills will rise by approximately £453 million in April. Combined with the revaluation increases, it is projected that establishments like the Amazon London distribution park in Tilbury could see rates bills rise from around £4.7 million in 2023 to £6.75 million from April 2024.
Webber emphasized the urgency of addressing the business rates issue and expressed disappointment that neither the Conservative nor the Labour party conferences dedicated substantial discussion to this matter. Given the impending increases exceeding £1.74 billion next year, he stressed the need for proactive action from both parties.
