A coalition of high-profile London business groups and government entities – including the city’s Chamber of Commerce and mayor Sadiq Khan – have called for an urgent review of UK business rates, ahead of a revaluation set to take effect next April.
In a letter to the Evening Standard, the alliance warned that, as a result of the revaluation, London’s share of national business-rate payments will “soar by an estimated £885m annually – a significant extra tax burden for businesses in the capital”.
As such, the letter noted, London firms will be paying 32% of the country’s total business rates.
Representing the interests of around 16,000 companies, the alliance pointed out that previous revaluations were supported by transitional measures that capped firms’ annual rate rises to 12.5%.
Yet under the latest revaluation, the first-year cap on charges for large corporates stands at 45%.
“Such large tax increases,” the letter said, “will have a real negative impact on investment, job creation and profitability for London businesses at a time when confidence and stability are needed more than ever.”
In the alliance’s view, the rate hikes will overburden firms in the wake of cost rises stemming from recent regulations and currency shifts. Brexit negotiations, it warns, will only compound those difficulties.
“Companies are already investing in the National Living Wage, the Apprenticeship Levy and meeting the increased purchasing costs caused by the recent dramatic fall in the value of the pound,” the letter said.
“The timing of the revaluation in April is particularly sensitive, as it will come at the same time as the government has announced it will invoke Article 50.”
It added: “At a time of unprecedented uncertainty for Britain’s economy, this huge rise in business costs is an unnecessary blow.
“Chancellor Philip Hammond says there is a case for the UK to ‘reset’ fiscal policy in the wake of Brexit. London businesses face real difficulties in planning for this unexpected rise in rates bills. The transitional relief scheme is meant to enable businesses to manage the rate rise.”
As such, in a separate statement, the alliance called for three measures:
Deputy London mayor for business Rajesh Agrawal said: “It is unacceptable that thousands of firms in the capital are, in effect, facing 50% increases in their business rates bills with barely six months’ notice.
“It is clear that we need far stronger transitional arrangements to soften the immediate impact and give businesses in the capital chance to plan ahead.”
He added: “We also need greater devolution over London’s business rates, including local control over future revaluations, so we can invest more in supporting jobs and growth in London – which, in turn, stimulates the UK economy as a whole.”