September’s 5.6 percent increase in the Retail Price Index (RPI) may see Business Rates increase in April 2012 by the highest amount in more than 20 years.
Both Labour and the Coalition Government have decided to link the Uniform Business Rate to the previous September’s inflation figure since 1990 even though legislation allows the use of a lower figure.
In April 2011 Business Rates went up by an average of 4.6 percent. The Government faces a difficult balance between the plan for deficit reduction and the protection of small businesses across the country, when many are struggling in the current economic climate.
Tom Holloway, Director, Holloway Iliffe & Mitchell commented “With a recent report showing that the traditional High Street has some of the highest vacancy rates on record this will be a further blow to shop keepers trying to already meet both higher energy bills and other overheads.”
It is predicted that the increase could generate up to £1.35bn in business rates next year, an increase of £350m over the 2011 sum raised.
Figures show that 171,000 firms are already facing increases in their business rates following the 5 yearly review of rateable values in 2010.
Craig Powell, Associate Director at Holloway Iliffe & Mitchell said “When homeowners gain from a council tax freeze and Government have chosen to use the lower Consumer Price Index (CPI) as opposed to the RPI figure when setting welfare payments, many businesses are feeling that they are being unfairly targeted for additional tax revenue.”
We will shortly find out whether these proposals are going to be implemented when the local government finance settlement is published in November. A spokesman for the Department for Communities and Local Government said: “We need to balance any further support for business against the tough decisions needed to reduce the deficit.”
