The government has promised many things to help businesses with their rising costs. In the UK, business tariffs are generally among the highest outbound costs for businesses. As the 2023 re-rating draws closer, concerns about the unquantified rate hike have increased.
One of the biggest ways the government has promised to help UK companies with interest rates is by freezing the multipliers For the next re-evaluation (JanSt April 2023). This would have been a relief to many commercial property owners and renters, as multiples typically rise above a valuation list – increasing Ratable Value (RV) and therefore business rates. British companies would have breathed a sigh of relief – but much too soon.
UK business rates are calculated by multiplying the RV of a commercial property by the appropriate multiplier. While freezing the multipliers certainly seems like a proactive solution, they have been frozen at their highest levels since their inception in 1990.
The secret increase behind your business rates
At the Autumn Statement, the Chancellor announced that the average total RI for England and Wales would increase by no more than 1%. Less than two months later, the Valuation Office Agency (VOA) increased this to over 7%.
“This increase is in no way reflective of individual industries or community sectors.” Anthony Hughes, Managing Director of RVA appraiser, commented. “Taking into account the artificially inflated multiples, commercial property owners and renters are expecting increases of about 14% – rather than the advertised 7.1%, with many industries and areas seeing an average RV growth increase of about 30%. This will have a devastating impact on companies that are unprepared.”
The multiplier freeze was just one of the measures announced to help companies. Another “proactive” measure the Government is showing off is the Business Support Package – worth £13.6bn. Freezing the multipliers but keeping them at the highest level, along with the inflated RVs, only serves the government with higher tax revenues from April 1st.
In fact, about two-thirds of the support package announced in the fall statement was already in place and only extended. That means companies will only receive around £4.5bn in additional support from November 2022. For context, the VOA
have found that the total mobile homes of commercial property in England and Wales is worth £70.3 billion.
