Following the September inflation figure of 5.6% announced by the Office for National Statistics this week a knock-on effect for businesses is that the Uniform Business Rate for business is linked to this inflation figure, which means next April every business across the land will see an increase in their business rates of up to 5.6%.
Ratings experts predicted the tax rise would collect an additional £1.35bn in business rates across all industry sectors next year. Since 1990 successive governments have linked the Uniform Business Rate to the previous September's inflation figure even though the legislation permits the adoption of a lesser figure, so it doesn’t look good.
Whilst the headline inflation figure made the news because most pensions and benefits are pegged to the September figure, nobody reported this potential disaster for business.
Last year’s rise of 4.6% was a hard enough increase to take during difficult times, but adding this next one means that hard pressed businesses will see an increase of over 10% in their rates in just 12 months.
Added to this, annual gas and electricity inflation was 22.3% and 12.9% respectively in September, which, combined with this new fiscal blow, will increase overheads for everyone and must mean that business will continue to struggle in difficult trading circumstances which can only be bad news for unemployment.
Hold onto your hats guys - the ride's going to get rougher.