The City of London is bracing itself for a tax hike estimated at more than £2bn when new business rates are revealed tomorrow.
Details of new business rates represent the first re-evaluation since 2010. Due to rocketing rents in London over the past six years, businesses in the capital are expecting huge increases for the next five year period.
London businesses as a whole are set to see the taxes rise by up to £7.5bn for the five year period when the new rates come into effect on 1 April next year, according to analysis by property consultants Gerald Eve.
Yesterday, the government said it will consult on transitional relief, which would phase in the tax changes over a number of years.
Under the transitional proposals, rate increases for large properties could be capped at either 33 per cent or 45 per cent for the first year. However, this has severely disappointed lobby groups who were hoping for the rise to be capped at 12.5 per cent. The consultation closes on 26 October.
The New West End Company, which represents West End retailers, has described the eleventh-hour consultation as "catastrophic", saying it could lead to job losses and reduced investment for central London's retailers.
London's skyscrapers will be some of the biggest hit by the new business rates according to leaked figures from the Valuation Office Agency (VOA) seen by City A.M.
Tenants in the Shard face a business rate hike of 50 per cent. HSBC, and various other businesses in Canada Square, are facing a rate increase of over 10 per cent.
According to real estate consultancy Colliers International, the bill for ratepayers in the Walkie Talkie is set to increase by £5.16m. Those in the Leadenhall building and the Gherkin could have to pay an additional £3.6m and £3.19m respectively.
Jerry Schurder, head of business rates at Gerald Eve, said:
How businesses can accommodate year-on-year rises of 45 per cent with only six months' notice is beyond me.
Retailers will labour under some of the biggest tax hikes. In Westfield White City, there could be increases of up to 62 per cent. Bond Street shops could be saddled with a 100 per cent increase according to VOA figures supplied by Colliers International.
"There are a lot of businesses in London that are watching nervously about what is happening with Brexit. One thing they don't need is something coming out of the blue that significantly increases their outgoings," said John Webber, head of rating at Colliers International.
Sean McKee, director of policy and public affairs at the London Chamber of Commerce and Industry said: "We could be facing a host of unintended consequences including firms cutting back on training, on investment in new equipment or indeed relocating out of London."