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Businesses across England are expected to face a £1 billion increase in their property taxes next year, following the release of the latest inflation data. The Office for National Statistics confirmed on Wednesday that Consumer Prices Index (CPI) inflation held steady at 3.8% in September, compared with the previous month. The September reading is highly influential as it is typically used to decide next year’s increases for a number of welfare spending commitments and tax policies. As part of this, the latest figure means that the overall business rates yield on companies across England is set to rise by 3.8% in April next year. Analysts at global tax firm Ryan have found that this will result in a £1.06 billion increase in business rates – the tax on commercial properties across the country. The increase will come on top of a nationwide revaluation of rates, which will see companies face new tax bills next year linked to property valuations from April 2024. Revaluations are however designed to be revenue neutral, meaning the overall tax burden will be the same but is likely to be redistributed across different regions and industries. Alex Probyn, a practice leader of property tax at Ryan, said: “September’s inflation figure locks in a £1.06 billion increase in the business rates yield in England for next year. “The UK already has the highest property taxes in the developed world – 3.7 % of GDP compared to just 1.4 % across the EU. “For large occupiers, this is a double hit: inflation increasing the yield and a new 10p supplement on large properties.” Business rates are paid on all commercial properties but particularly affect high-street firms, such as shops, pubs and restaurants, due to their significant property estates. The expected increase comes a month ahead of the autumn Budget, when the Chancellor is expected to confirm changes to business rates designed to ease the burden on small high-street firms. But the Treasury is expected to cover these discounts by increasing payments for the biggest properties – those with a rateable value of more than £500,000 – with a supplement worth up to 10p on each £1. But the proposals have come under fire from supermarkets, office operators and airports, who would face heavy increases in their payments. Business rates are devolved to Scotland, Wales and Northern Ireland.
