Retail sector threatened as inflation could push up business tax bills

British firms could be left facing an additional £1 billion tax bill in 2018, unless action is taken to freeze business rates, it has been claimed.

The British Retail Consortium believes that without government intervention, businesses could be left facing a tax increase that is twice the size of that noted last year.

New figures from the Office for National Statistics show that Retail Price Inflation hit 3.9% in September and it is that figure that will be used when setting new rates values in April.

Consultancy firm Gerard Eve have suggested that rates could jump by £1 billion should the 3.9% increase go ahead, with that figure based on the £25.7 billion paid in rates for this financial year.

Should it occur, retailers could see a further £273 million added to their bills, which may force many into insolvency or have severe financial implications.

BRC Chief Executive Helen Dickinson has suggested it could be “the last straw” for many retailers and warned that “empty shops and gap-toothed high streets” could soon be prevalent.

“The consequences of today’s RPO figures could be severe for many shops in a precarious position and struggling to survive,” she cautioned.

Consumer spending power is also likely to weaken and when coupled with the rates rises that came into force in April, businesses may simply not be able to cope.

Those facing an uncertain future may wish to undertake an independent business review to assess their current situation and to develop a strategy for more practical approaches to business.

Although the revaluation was designed to lower business rates, it is being staggered across a five year period and firms are therefore overpaying during the transition period.

Other businesses were hit hard as the buildings they occupy rose in value considerably from the last time rates were calculated in 2010.

The Government has already said it plans to link business rates to the Consumer Price Index in 2020, but the latest inflation figures mean calls are now being made to bring that date forward.

By Phil Smith


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