PM urged not to ignore tax pledge by raising business rates for firms

The Prime Minister is being urged not to rip up another tax pledge by increasing the tax burden on high street shops, pubs and restaurants.

Retail tax experts have warned that the Government could land firms with a £700 million rise in business rates in England next April unless it confirms changes to the property tax system.

The Consumer Prices Index (CPI) measure of inflation by the Office for National Statistics (ONS) for September, which will be announced next month, is ordinarily used to determine rises in business rates for the next year.

Rates levels have been frozen since the start of the pandemic, with the previous financial year seeing a rates holiday for all retail and leisure operators.

However, property tax experts at Altus Group have said rates could be increased by inflation when the new financial year starts in April.

This would oppose a manifesto commitment made by Boris Johnson in 2019 saying that a re-elected Conservative government would lower the burden of business rates.

In July, the CPI reading showed inflation of 2% for the 12 months to July, although analysts have predicted this will rise further.

A 2% increase in business rates would signal that gross business rates bills next April for 2022/23 would rise by £667.81 million in England, of which £162.08 million would be shouldered by the embattled retail sector, according to forecasts by Altus.

Robert Hayton, UK president at Altus Group, said: “There are real expectations that inflation will rise later this year, potentially pushing those rate rises even higher.

“Ending the ridiculous policy of annually increasing the tax rates and instead focusing on growth is a far better way for councils to increase their local taxation revenues to fund local services, honouring the commitment made.”

Business rates are devolved to Scotland, Wales and Northern Ireland.