Business rates set to reach their highest level since introduced in 1990, costing firms an extra £400m

Kasmira Jefford
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The Treasury will raised nearly £30bn from business rates in 2016/17 (Source: Getty)

Retailers and other businesses are bracing themselves for another rates squeeze next month, when the levy will rise again to reach its highest level since it was introduced in 1990.

From 1 April, the uniform business rate will hit a landmark 49.7 pence in the pound, which will cost businesses an extra £188m in rates in 2016/17 and the total rates bill to almost £30bn, according to a report released yesterday by CVS surveyors.

The government is also bringing an end to business rates discounts for small retail properties, which will see £284m added to bills this year. Together, these additions will add some £400m to businesses’ rates bills, the surveying firm said.

Retailers have long called for reform of the business rates system, which they argue is damaging Britain’s struggling high streets and putting extra strain on businesses already struggling with declining footfall as consumers increasingly shop online.

The levy is charged on commercial properties including shops and warehouses and calculated according to the rental value of properties.

The British Retail Consortium estimates that rising rates, together with the new national living wage and the apprenticeship levy will add £14bn to retailer's bills by 2020.

Mark Rigby, chief executive at CVS, said: “The news that the business rates levy has reached its highest ever level will be yet another source of frustration for commercial occupiers feeling the squeeze. This is a hangover from a range of poor Government policy decisions which are causing pain for businesses, from SMEs to major multi-nationals."

“To add insult to injury, the Government’s use of out-dated measures of inflation will stop firms getting a reduction in their business rates this year. What could have been positive news for firms is instead yet more pressure on overheads. The link to the Retail Price Index is costing firms money and is another sign that the current rates regime is clunky, archaic and not geared towards serving businesses."

He added that the use of RPI instead of CPI (the Consumer Price Index), which has been called for by businesses, will cost them £210m in 2016/17 alone.

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