Retailers’ expansion plans will be seriously dampened and some will close altogether unless the Chancellor freezes business rates for companies of all sizes in this week’s autumn statement, experts have warned.
Jeremy Hunt has reportedly indicated the business rates multiplier – used the calculate the tax bill – will remain frozen for small business, but not for larger ones.
It means the inflation-linked bill is set to rise by 6.7% for larger retail and hospitality businesses from April 2024.
According to commercial property consultancy Colliers, it will add an extra £1.74bn to the overall business rates bill, with the retail sector alone seeing an increase of around £480m.
Taking M&S as an example, Colliers said the retailer’s annual rates bill would rise by £10m.
“This will be a massive hit to the high street,” said Colliers head of business rates John Webber. “Although most businesses in the retail and hospitality sectors have benefited to some extent from the 2023 revaluation, the sectors are still under pressure, facing higher occupational costs across the board as energy, employment and insurance costs soar.
“The larger retailer and hospitality companies are the main employers in their sectors. Hitting them with a 6.7% rise in their rates bills next April will have a dire impact and certainly dampen expansion and growth plans and for some businesses might be the last straw.”
Webber added: “The situation is even more bizarre when we see the current inflation figure has already fallen to 4.6% and may be around 3% next April, but we would see such businesses tied to the 6.7% figure for the year.”
Hunt is due to deliver his autumn statement on Wednesday (22 November). In last year’s statement, he froze the multiplier for business of all sizes.
Webber said leaving it frozen only for smaller businesses next year would condemn more retailers to the fate of Wilko, which collapsed into administration in August, leading to about 12,000 job losses and the closure of its 400 stores.
“If the Chancellor does not support those retailers and hospitality companies with multiple stores or outlets, we will continue to see the trail of bankruptcies we have seen from such chains in recent years from Toys R Us and Laura Ashley and Carluccio to most recently TM Lewin and Wilko,” said Webber.