Retailers will be hit by an increase in business rates of hundreds of millions of pounds in 2014.
Business rates are pegged to inflation – as measured by the Retail Price Index. The annual increase is based on September’s RPI – which the ONS published today as 3.2%.
The British Retail Consortium said the increase in RPI meant that for every £1 retailers pay in corporation tax, they now pay £3.44 in business rates. Back in 2005, it was £2.48 for every £1 in corporation tax.
The BRC also estimated that retailers have had to stump up an average of £242m more every year in business rates.
“At the BRC we have spoken to retailers who will be forced to close shops because of the increase and many that have decided not to open new ones,” said said BRC director general Helen Dickinson.
“This tax increase is likely to cost communities across the country 19,670 full time jobs. It is clear that the business rates system is no longer fit-for-purpose. It requires complete reform,” she added.
Meanwhile, the Association of Convenience Stores said the latest hike translated into a £25.8m increase in rates for c-store owners.
“Continuing unpredictable increases in business rates have put unnecessary pressure on businesses and stifled investment at a time when growth is desperately needed,” said ASC chief executive James Lowman.
CBI chief policy director Katja Hall added: “This level of RPI could lead to another business rates hike in April.
“We already have one of the highest commercial property taxes of any EU country, so the Government must step in at the Autumn Statement to limit next year’s business rates increase at 2%.
“We then want to see a full review of the system to explore options for longer term reform.”