Business rates to rise by £1bn-plus next year

Posted by Anna.Svandova at 3:18 PM on Oct 17, 2017


Ratepayers in England face a cumulative increase in rates bills of more than £1bn as a result of the RPI rate of inflation in September being 3.9%, the biggest annual increase since January 2012, as announced today. Experts have warned of a significant blow to the property industry.

The Uniform Business Rates (UBR) in April 2018 will increase in line with the September rate of RPI. With total take from business rates for the year 2017/18 standing at £25.7bn, the increase of 3.9% equates to a rise of £1bn, reports Gerald Eve.

Gerald Eve said: "The huge increase is yet another blow to hard-pressed ratepayers, many of whom are only just coming to terms with enormous surges in bills as a result of a revaluation in April this year. The rise is especially controversial due to the use of RPI to calculate increases – a discredited measure that records higher values than the wider-used CPI figure." Jerry Schurder, head of business rates at Gerald Eve, said: “With the weakness of the pound causing inflation to surge, this is especially bad news for ratepayers, whose bills are based on RPI in September. Last month saw a recent peak in inflation, and this will filter through to £1bn more being taken in rates payments from April onwards.

“Just six months ago many firms had to adjust to enormous surges in rates bills as a result of the revaluation, and now they have to figure out how to deal with another increase of 3.9%. At a time when the economic clouds are darkening, this could be the straw that breaks the camel’s back for many firms.

“That the Government uses RPI to calculate increases – when it uses the lower CPI measure for anything it is paying out, such as benefits – is a further kick in the teeth and means that the total increase in April is £230m higher than it needed to be. The Government has committed to moving to CPI by 2020, so why not make the change now and save firms some of the pain?”

Inflation wipes out cuts

Gerald Eve reports that the impact of the latest increase is perhaps most pernicious for those larger firms due decreases as a result of the revaluation.

"The impact of transitional relief arrangements means that tens of thousands of businesses whose property values have plummeted and should have received big rates cuts will see negligible falls in April – and may never receive the full reduction they are due," it adds.

Under transitional relief arrangements – which phase in increases for those facing large rises, at the cost to those due decreases, which are also phased – the maximum decrease for a larger property (with a Rateable Value above £100,000) in 2018/19 is 4.6%. But with inflation pushing bills up by 3.9% the actual fall is 1%.