Firms braced for £1.2bn hike in business rates

BUSINESSES in England and Wales are bracing themselves for a £1.2bn tax hike next year, while an alarming number of companies are being taken to court for failing to keep up with climbing payments.

Business rates specialist CVS expects a hefty rise in business rates next year, as the September Retail Price Index (RPI) – used to determine the following year’s increase – is set to come in at 4% when official figures are released on Tuesday.

It means the Government could rake in an extra £1.2bn in business rates – which are calculated based on the rateable open rental value of a premises – on top of the £23.9bn it is expected to bring in from English businesses this year.

The move is expected to increase hardship among English and Welsh companies, many of which were left reeling following the revaluation of business rates earlier this year, which accounted for property price changes over the past seven years.

Furthermore, a Freedom of Information request filed by CVS shows that 164,757 business premises in England and Wales were hauled before a magistrate in 2016-17 after failing to pay their business rates.

It means that around one in every eight businesses received a summons on those grounds from their local council, CVS said.

In the current financial year alone – counting the period from April 1, when the controversial rates revaluation took place, to the end of August – a total of 81,093 businesses have been summoned to court for failing to pay their business rates.

CVS chief executive Mark Rigby called on the Chancellor to freeze 2018 business rates as part of next month’s Autumn Budget, saying the economic environment is already punishing struggling businesses.

A Department for Communities and Local Government spokesman said: “Following the recent revaluation, the majority of businesses will see a fall in their rates from this year.

“In addition, [in] the spring Budget the Chancellor announced a £435m package of rate relief that is now being rolled out across the country.”