CVS business rent and rates specialists has warned tax bills next year (2018/19) for business rates could increase by £1.2b as a result of higher than forecasted inflation.
The figure affects business rates because the Uniform Business Rate (UBR) multiplier, used by local authorities to calculate business rates, is uprated in line with RPI. The September RPI figure is used for the following financial year.
Within the 2016 budget, the Government announced the uprating for inflationary increases to business rates would be switched from the RPI to the lower Consumer Price Index (CPI) measure. However, implementation is not planned until 2020 and economists at Capital Economics have warned that RPI inflation could hit 4% in September - the highest level since December 2011.
CVS said if the UBR was inflated at 4%, that would add an additional yield of £1.2b to the overall business rates burden for England, and restaurants, which accounted for almost £1.1b of overall rateable values in England when the UBR was set, would face an increase of nearly £20m in bills through inflation.
Many political parties manifestos published ahead of the General Election referenced the need to reform business rates, but last week's Queen speech made no reference to the promised review.
Mark Rigby, chief executive of CVS, said: "When I met with the Secretary of State, Sajid Javid, ahead of the budget, I urged him to accelerate the switch from RPI to CPI and to implement that change from April this year. With higher operational costs through increases to both the National and Minimum Living Wages, the introduction of the Apprenticeship Levy and higher business rates bills as a result of the revaluation, it does beg the question how much more are businesses expected to take?"
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