"Potential business rates increase could see many businesses closing their doors"
If inflation stays at a high level, experts fear that business rates for commercial properties will rise in the next revaluation by over £2 billion.
Business rates specialists RVA Surveyors warned that if the UK’s inflation rate stays close to its 40-year high, many businesses “will simply not be able to face” the increase in business rates that it entails.
Business rates are set at each revaluation for a period of time known as a rating list. The current rating list, running from the April 1, 2017, until the March 31, 2023, was extended due to the pandemic in an attempt to ease the burden on businesses.
Now with revaluation once more looming on the horizon, RVA Surveyors said business owners and leaders are increasingly nervous as to what another rise could mean for their businesses.
Read more: Global rate increases press on relentlessly.
For future rating lists, the government has shortened the period of time it will cover. This, RVA Surveyors said, is an attempt to make business rates liability more in-line with up-to-date market rents; supposedly lessening the impact of sudden changes on businesses’ outgoing costs.
According to statistics published by the Valuation Office Agency, by March 2022, less than 40% of businesses in England and Wales had reviewed their business rates - a number that is considerably low, when parliament found that, by January 2022, there were 1.9 million registered businesses in the UK.
The move to a three-year rating list is intended to lessen the impact of sudden changes in business rates, but with a predicted hike of up to 12% in the next revaluation, whether this will help is yet to be seen.
RVA Surveyors said these figures paint a picture of a wider business community that is either unaware, sceptical, or simply too busy with the current economic climate, to think of challenging their business rates.
“Business rates has seen an upwards-only trend for years, and it is past time for the government to step up and sort out an increasingly outdated tax system,” Anthony Hughes, managing director at RVA Surveyors, commented. “We need to see from Truss’s government that help for businesses is paramount in the coming days; not only to help businesses stay afloat, but to keep employment levels steady as well.”
Hughes pointed out that businesses have been suffering from escalating overheads, and a potential business rates hike on this scale could see many businesses closing their doors.
“As bills continue to soar, and speculation as to when businesses will receive help from the government runs rampant, business owners and leaders must take steps to create savings where they can,” he said.