Yesterday it was announced the September 2024 CPI figure was 1.7%. This has a significant bearing on business rates as the multiplier, which forms a crucial cog of calculating a company's liability, is linked to CPI.
What is the multiplier?
The multiplier applied to a property's rateable value gives the annual liability for that premises before any reliefs are applied.
The standard multiplier is currently 0.546 and the small multiplier is 0.499. The standard multiplier is used when the property's rateable value is 51,000 or more.
For example, if a property has a rateable value of 10,000, as the current small multiplier is 0.499, the annual charge before reliefs will be £4,990.
How is September's CPI figure related to the multiplier?
The multiplier for the upcoming year rises by the September CPI figure. So, for example, September 2023's CPI figure was 6.7%, subsequently, the standard multiplier for 2024/25 is 0.546, a 6.7% increase on 2023/24's standard multiplier of 0.512.
Does this mean my business rates liability will be rising next year?
The short answer is we don't know yet.
Whilst the standard multiplier rose by 6.7% last year, the decision was made to freeze the small multiplier at 0.499. The small multiplier has been frozen at 0.499 since 2020/21 and, prior to the increase this year, the standard multiplier had been frozen at 0.512 since 2020/21.
It will be announced in the upcoming Autumn budget whether the multiplier will be frozen or not.
There has already been outcry at the prospect of the multiplier rising with the potential increase estimated to cost businesses across England and Wales an additional £500 million. There is widespread demand for the multiplier to come down, not up; recently, the British Retail Consortium has called for a reduction of 20% to the multiplier for specifically retail businesses.
If the multiplier isn't frozen, a property with a rateable value of 10,000 will be paying £5,080 in 2025/26 before any reliefs, an increase of £90 from 2024/25.
If you would like to know what your business rates charge will be if the multiplier is not frozen or have any other questions on the topic, please get in touch with us on 0208 0950 990 or info@hollowaybond.co.uk.
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