Business groups are demanding action from the chancellor in the Autumn Budget to prevent a damaging rise in business rates next year.
The September rise in inflation will be used to calculate the increase in business rates set for April next year.
And, as the retail price index came in at 3.9 per cent for last month, business rates will rise by a total of £1.1bn, business groups have said.
Heavyweight industry representatives such as the Confederation of British Industry, the Federation of Small Businesses, the British Chambers of Commerce and the British Retail Consortium have written to Philip Hammond saying the rates system is at “tipping point”.
The letter, published today, reads: “Our members, representing diverse sections of the economy, firmly believe that an increase in excess of £1bn is unsustainable and will only compound the negatives of the existing system.
“Let there be no doubt, this sharp increase will have a negative impact on business investment.”
A range of measures could be used to limit the rise. Rates could be freezed, capped, or the rise could be linked to the consumer price index.
The inflation-linked rise in business rates will come a year after the government re-evaluated the tax rates for every business in the country.
As the changes in tax were linked to changes in rents on properties, London firms were hit with a heavy increase. Some businesses in the capital, particularly in the West End, were faced with rate rises of more than 60 per cent.