Two thirds of businesses subject to the government’s new ‘super tax’ business rate multiplier will increase prices to combat cost pressures, a survey has found.
The effect would be to increase prices in flagship retail stores by around three per cent, according to High Streets UK.
“[The higher multiplier] would be a disaster for jobs, investment, growth and ultimately, lead to higher prices for consumers,” Dee Corsi, Chair of High Streets UK, said.
“Current proposals place too great a burden on the UK’s flagship high streets, undercutting the Government’s national growth ambitions.”
High Street UK’s survey of 115 businesses found that 600 stores and up to 5,500 jobs are at risk.
The higher multiplier for properties worth more than £500,000 is intended to “capture the majority of large distribution warehouses, including those used by online giants”, and will fund two new lower rates for smaller businesses.
Campaigners have long argued that the UK’s system of business rates places brick and mortar retailers at a disadvantage to online retailers.
But High Streets UK said properties subject to new higher multiplier are 5.1 times more likely to be on flagship high streets than anywhere else, “despite Government claims the proposals will target online giants”.
Business rates to double in April
While the higher multiplier for larger spaces would come into force in 2026, business rates are set to rise more than 140 per cent for thousands of high street businesses across the UK this April.
Retailers currently benefiting from the relief will see their business rates bills increase in April on average from £3,751 a year to £9,003, and restaurants will see a rise of £5,563 to £13,351 a year, according to Colliers.
Business rates expert at Hertnell Taylor Cook, Chris Grose suggested that the end of relief may be no bad thing, and that the Government can’t “subsidise retail rents” in the long term.
“There’s going to be a reduction [in the number of shops], but that’s also to do with consumer demand… You need to be doing something in order to match the amount of retail space to the demand,” he said.
But short-term pain is guaranteed: Pub and brewer Daniel Thwaites has previously said that relief has been a lifeline for many businesses, and its reduction may be “the final straw” for the “already overtaxed” firms.
Earlier this week, the British Chamber of Commerce called for the government to produce a “tax road map” on business rates.
“This would enable firms to know when cost-pressures will ease, allowing them to plan their investment decisions,” Stuart Morrison, Research Manager at the BCC, said.
“They also want to see movement on infrastructure development and renewed support for exports, so they can navigate the choppy waters ahead with more confidence.”