RPI lottery hits retailers with £350m tax blow
Published: 19 October, 2011
The new RPI inflation figure threatens to produce a £350m business rates increase for retailers next April.
The convention is that Business Rates in England, Scotland and Wales rise each April in line with the previous September’s RPI. On Tuesday that figure has been announced as 5.6 per cent, its highest for 20 years.
The BRC, GL Hearn and others are lobbying Government to implement a considerably lower increase, as the Chancellor has the discretion to do.
British Retail Consortium Director General Stephen Robertson said: “Basing business rates rises on the previous September’s RPI is a lottery and retailers have just seen a losing number come up.
“With trading conditions staying tough, an increase on this scale would have a hugely detrimental effect on retailers’ ability to invest and create jobs.
“Retailers already pay 28 per cent of all business rates, a bigger proportion than any other sector. They were expected to cope with a near-five per cent increase this year. Some didn’t survive it. It cannot be right to hit them with another massive blow next April.
“The Government should impose a much lower increase and, for the longer-term, review the system so that future increases are more predictable and more affordable.”
Blake Penfold, director of business rates at GL Hearn, added: “GL Hearn considers that setting the Uniform Business Rate (UBR) multiplier at levels based upon a very high September RPI of 5.6 per cent will have a negative effect across almost all sectors in the economy. In particular, any increase is likely to have a strongly adverse impact on retailers, who, by the very nature of their businesses, rely heavily upon large property portfolios, in a climate in which sales and profits are not increasing at the same level as the RPI.”
