London Businesses to Pay Additional £575 Million in Business Rates

Many London businesses are set to bear a significant financial burden as they are expected to pay an additional £575.6 million in business rates due to the exclusion from certain support schemes introduced by the Chancellor.

Impact of Business Rates Support Package

Despite the measures put in place to cushion businesses against inflation, companies operating out of expensive and sizeable properties in London will feel less relief. The business rates support announced by the government aims to protect over a million ratepayers from rising costs. However, the standard business rates multiplier, which affects properties valued over £51,000, will experience an uprate by 6.7% based on the September’s Consumer Price Index (CPI), come April.

Differential Effects Across the UK

Regions across the UK with lower property values will see more benefits than Central London, where property prices are comparatively higher. This geographical disparity in property values translates to a varied impact of the government’s support measures, which will be less effective in the capital according to Blick Rothenberg’s partner Paul Noble. Additionally, UKHospitality's leader Kate Nicholls highlights that while one in five hospitality businesses in the UK are in the upper tax band for business rates, in London this figure triples due to the size and value of the properties.

As a result, a substantial number of independent small hospitality businesses in London will miss out on the advantages of the Chancellor's freeze on business rates.

Savings from the Rates Support Package

The rates support package, valued at £4.3 billion over the next five years, includes both a continuation of 75% relief for retail, hospitality, and leisure properties (benefitting 230,000 premises) and a freeze on the small business rates multiplier. Consultancy Altus Group calculated that the measures will save the average shop £11,728, restaurant £16,507, pub £12,869 and café £6,072 in business rates next April.

Additional Measures for Businesses

In a broader effort to support businesses, the Chancellor has implemented several measures including the permanent establishment of a tax break. This tax break allows enterprises to deduct fully the cost of investing in plant and machinery from their tax bill—an initiative that can reduce taxes by up to 25p for every pound invested.

London, Business, Taxation