Revenue from the controversial business rates tax in England is set to be £7.4 Billion higher in April than in 2010 and up £1.4 Billion year on year following the Spring Budget new forecasts reveal despite a Conservative manifesto pledge made to lower the burden ahead of the General Election in 2019.
Commercial real estate intelligence firm Altus Group say £18.9 Billion was collected in the business rates tax in England during 2010/11 but that revenue will have soared to £24.9 Billion during the current 2023/24 financial year and is set to soar even further to £26.3 Billion during 2024/25 up 39.15% compared with 2010/11.
Whilst nearly 220,000 firms will face the biggest year on year increase to the standard rate of tax for business rates in over 30 years in April.
Giving with one hand, taking with the other
Whilst the Chancellor announced a 40% relief on gross business rates bills for new studio space to support film and high-end TV worth around £40 Million annually, to pay for that, empty rates relief for Landlords with hard to let vacant commercial properties was slashed raising around an extra £40 Million annually.
With the increase to the standard multiplier in April for 2024/25, paid for those properties with a rateable value more than £51,000, 219,410 shops, pubs, restaurants, offices, factories as well as public sector buildings in England will now face a business rates tax hike of £1.66 Billion of which £570.45 Million will be shouldered in the Capital and £306.22 Million by the embattled retail sector.
Even allowing for the ‘give away’ by the Chancellor at the 2023 Autumn Statement through the freezing of the small business rates multiplier and the extension of the 75% retail, hospitality and leisure discount subject to a cash cap of £110,000 business rates revenue in England will still be £1.4 Billion more for the next financial year during 2024/25 and £7.4 Billion more than in 2010.
Alex Probyn, President of Property Tax at Altus Group, said, “The 6.7% increase in April to the standard rate, at an effective tax rate of 54.6%, will mean firms will face the biggest year-on-year increase to the standard multiplier since 1991 despite the UK’s headline rate of inflation set to fall below the target rate of 2% within the coming months.
“This is no way to encourage investment and foster economic growth especially after two consecutive quarters of contracting GDP.”
Business rates are devolved to Scotland, Wales and Northern Ireland.
