Retailers brace as business rates costs soar to over £37bn

With a new business rates cycle set to come into effect from April 1 across England, Scotland and Wales, new data from global tax firm Ryan shows that the costs of business rates are expected to hit £37.1bn this year – a 10.1% increase of more than £3.4bn.

This increase is being driven by rising inflation, government policy changes and the withdrawal of business rates relief – not least the £1.4bn retail and hospitality relief that has been replaced by lower multipliers funded by a surtax.

“This is a significant increase in business rates receipts driven by inflationary uprating, an allowance for losses on appeal and the withdrawal of government support for the retail, leisure and hospitality sectors rather than the effects of the revaluation itself,” said Alex Probyn, practice leader for Europe & Asia-Pacific property tax at Ryan.

“Receipts increase in revaluation years but those increases have become larger over time, reflecting inflation and policy changes rather than the revaluation itself, which is revenue neutral.

“The government recognised the challenges around receipts and expenditure valuations through its current call for evidence, but any meaningful reform is unlikely to take effect before 2029. That will come too late for many businesses, as even with transitional caps in place limiting increases, those increases will still compound and bills can more than double by the end of the cycle,” Probyn warned.

While business rates are set to soar across England, Wales and Scotland, they have been paused in Northern Ireland, which Probyn said represented a “political choice” on behalf of the government.

“Pausing revaluation in Northern Ireland reflects a political choice about how to respond to post-pandemic increases in valuations, highlighting the divergence in policy across the devolved nations,” Probyn said.