Government urged to freeze business rates again

Industry bodies are making fresh pleas to the government to continue to freeze business rates to help those struggling in the current economic climate. 

Business rates are a tax UK businesses pays on the non-domestic property they occupy – much like council tax for your home. Business rates in England are calculated by multiplying the rateable value of your property by a ‘multiplier’ set by the government, which is linked to the inflation rate in September. Despite inflation falling in July from 7.9% to 6.8%, many are now expecting another rise.

UKHospitality and British Retail Consortium have both called for the business rate freeze to continue as the cost of doing business still has a grip on the small business community, with prices for many key elements like energy and raw materials remaining higher than a year ago.

What are industry bodies saying?

“Another fall in the overall rate of inflation is encouraging and indicates a positive trend,” says Kate Nicholls, chief executive at UKHospitality. “However, core inflation remaining flat at 7% does raise serious concerns that hospitality businesses will be hit hard by an inflation-linked hike in business rates next year. “With rate increases following the September inflation rate, we need to see a dramatic fall in inflation by then or hospitality will face a business rates bill running into the hundreds of millions.

“It’s clear the fall in the overall rate has been driven by decreasing energy costs, which suggests further action on energy could result in inflation coming down far more rapidly. Ofgem has set out a number of recommendations to clean up the energy market and these should be implemented as soon as possible.”

This is a sentiment shared by Helen Dickinson, chief executive of the British Retail Consortium. “Headline inflation fell again, driven by falling household bills and clothing prices,” says Dickinson. “There remains potential stumbling blocks ahead. “Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions could put pressure on some global commodity prices, slowing the fall in food prices. Retailers continue to invest heavily in keeping falling prices on track. 

“Government can support these efforts by freezing business rates from next April, or else risk adding a £400m additional pressure on prices.”

Last autumn, chancellor Jeremy Hunt revealed a £13.6bn support package to help businesses still recovering from the pandemic – and that included freezing business rates, which usually increase annually. It is hoped that the government will acknowledge the significant pressure SMEs continue to operate under and prolong the freeze.

Further reading:

• These are the UK regions most affected by the business rate rise
• HMRC mileage rates – small business tax allowances explained

Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, TNW, UKTN, The Business Magazine and Maddyness UK. She also works closely with agencies such as CEW Communications to develop content for their startup and scaleup clients.