As always the devil is in the detail and today the detail revealed that the Chancellor has extended the period for which an occupier must occupy a property to gain empty rates relief from six weeks to thirteen weeks. This is a kick in the teeth for those retail or leisure landlords who are unable to find a tenant for their property, who will end up paying considerably more in business rates for a property from which they are receiving no income. This is likely to deter property investment and values in an already distressed market.
The Chancellor’s failure to “right the wrongs” of the 2023 Autumn Statement and cancel the business rates increases planned for April was also massively disappointing. Given the Chancellor confirmed today that the OBR has forecast inflation to be below 2% in 2 months’ time, it is outrageous that all but the smallest of UK businesses will be paying increased business rates tied to a multiplier that will increase from 51.2p to 54.6p in the pound in line with the 6.7% inflation figures of last September.
This planned increase will impact 220,000 businesses who will pay an extra burden of £1.66bn in tax from April 1, 2024. Colliers has estimated that the businesses in the retail sector will pay over £360 million more in business rates, the offices sector around £400 million more and logistic/ industrial sector around £450 million more as a result of the increased multiplier.
This week M&S CEO Stuart Machin described the 6.63% increase in business rates for larger companies as “economically illiterate” and called for it to be reversed. Such a policy puts the High Street under even greater threat than it is already.
We were also disappointed to see that the Chancellor did not extend the retail, hospitality and leisure relief for small companies that he announced in November. The temporary nature of the relief requires an annual review which leaves many businesses unable to plan for more than a year in the future. No pub, restaurant, café or small shop can realistically plan for the future if they are peering over the cliff edge of a 75% increase in their rates bill next year. The Chancellor should have given these businesses some confidence by confirming that the relief will be in place until at least until the next revaluation in 2026.
All in all a very disappointing Budget in terms of business rates. The Chancellor spoke of creating a tax regime pro-business, designed for further “levelling up” and competing on the European stage. Yet nowhere else in Europe do businesses pay approaching 60% the rental of their premises in property taxes and at current levels this is unsustainable and deters new investment in businesses.
This is a damning indictment for the Conservative Government who have failed their manifesto promise to reduce this tax.”