Shops and businesses in London are going to face big rises in tax bills from next April.
Government analysis reveals that, while business rates will fall in every other region of England when rates are rejigged next year, they will rise by an average of 14% in London.
In Shoreditch, bills are set to rise by an eye-watering 142%, according to property company JLL.
Business rates are a tax payable on non-domestic property — in other words, on office, retail, or industrial space. It is measured per square metre.
Rate are currently calculated based on pre-recession rent values from 2008. But from April 2017, rates will be based on 2015 rental values.
Rents have rocketed in London since 2008 while falling across many other parts of the country. Analysis from property services firm JLL shows that business rates on office space will increase dramatically in areas like Shoreditch and King’s Cross, which have become increasingly popular due to their good transport links and ample office space.
Here is a breakdown of how office rates will affect different parts of London. The chart shows the difference in rates between 2016/7 and 2017/8:
That shows a staggering 142% monthly increase in Shoreditch — from £12 per sq ft to £29 per sq ft. In King’s Cross, another newly-established prime market which has seen a lot of development since 2008, rates will rise by 85%, from £19 per sq ft to £35 per sq ft.
When it comes to retail rates, the picture is equally bleak. Established retail destinations, as well as up-and-coming destinations, will face huge increases.
Brixton Road, in south London’s Brixton area, will face a rates increase of 120%.Central London’s New Bond Street, which already has some of the highest retail rates in London, will see an increase of 88%, from £380 to £720 sq ft.
Other parts of the country will see retail rates fall significantly, with Birmingham High Street suffering the largest drop. That’s because high streets across the country have been in decline since 2008, and rental values have fallen in response.
Here is the chart demonstrating the fall in retail rates outside of London:
Rental values in Birmingham’s High Street will decrease from over £100 per sq ft to just over £40 per sq ft. That will come as a significant relief to businesses which are struggling with a declining retail sector, and the rapid rise of online shopping.
JLL said that the new rates were a “concern,” saying: “Property taxes raise more revenue in the UK than any other country. The government needs to consider whether this is justified.”