Retailers will face an extra £242m in business rates next year as the ONS revealed September’s RPI rate of inflation hit 3.2%.
The business rates increase will come into force in April.
British Retail Consortium (BRC) has calculated that retailers will face an extra £242m, putting 19,670 full time jobs at risk due to potential shop closures and reduced investment.
BRC director general Helen Dickinson said: “Across the country today, retailers are adding up what this increase in the RPI will mean for the cost of their business rates next year. Many will be wondering whether they will be able to stay open.
“New analysis by the BRC shows that, because of this increase, retailers are going to be paying £3.44 in business rates for every £1 they pay in corporation tax in 2014. That’s a rise from £2.48 in 2005 and demonstrates just how radically our tax system has changed and how hard our high streets are being hit.”
Dickinson added: “At the BRC we have spoken to retailers who will be forced to close shops because of the increase and many that have decided not to open new ones. This tax increase is likely to cost communities across the country 19,670 full-time jobs. It is clear that the business rates system is no longer fit-for-purpose. It requires complete reform.”
The BRC is currently lobbying Government to cap business rates increases at 2%.
Business rates are calculated based on September’s RPI inflation rate. The increase will come into effect in April 2014.
CBI chief policy director Katja Hall said: “We already have one of the highest commercial property taxes of any EU country, so the Government must step in at the Autumn Statement to limit next year’s business rates increase at 2%.
“We then want to see a full review of the system to explore options for longer term reform.”
But high Street’s Minister Brandon Lewis defended the Government’s and said:”This Government is supporting business and entrepreneurs.
“Corporation tax is set to become the lowest in the G20; a new Employment Allowance will mean 450,000 small businesses no longer have to pay national insurance contributions and because all business rates remains linked to inflation there has been no real terms increase in bills for over 20 years.
“We have doubled small business rate relief for the past three years helping an estimated half a million small firms, who are at the heart of our national economy, meaning 300,000 had no rate bill to pay at all. Latest figures show that a total of £900m was paid out last year.”
Boxpark chief executive Roger Wade has joined Pop Up Britain in calls to the Government to offer smaller retailers a three month business rates holiday, encouraging them to launch pop-up shops in empty units.