A slight drop in the headline inflation rates last month will be little comfort to businesses currently facing a business rate hike that will be based on September’s CPI inflation figure.
New figures from the Office for National Statistics show that inflation fell 0.1% in August, to 6.7%, a slowdown described as “glacial” by UKHospitality Chief Executive Kate Nicholls. Few pundits expect a significant drop in the inflation figure for September which has direct implications for business rate bills due to be issued in April, 2024.
Current tax rules link September’s CPI rate to a rise in business rates. The Uniform Business Rate (UBR) is adjusted each year by applying the CPI rate. This is then multiplied by the rateable value of a property, to calculate business rate bills. The multiplier has risen from 34p in 1990 up to 51.2p today.
Said Nicholls, whose organisation lobbies on behalf of the hospitality sector: “Inflation slowing at a glacial rate will leave hospitality businesses incredibly concerned ahead of next month’s crucial figures, which determine the annual rise in business rates.
“In the current economic climate, rates rising with inflation, coupled with reliefs ending, would be catastrophic for businesses. A commitment from the Government to freeze the business rates multiplier and commit to an extension of business rates relief is needed as soon as possible.”
Several high-profile business lobbies such as the British retail Consortium have already publicly called on the Government to extend business rates reliefs ahead of the new financial year, and that pressure is only likely to increase as April’s cliff edge moves closer.