Companies owe councils £2.5bn in unpaid business rates

Analysis of official data by real estate advisers Altus Group shows that companies owe English local authorities almost £2.5 billion in unpaid business rates, with the pandemic and subsequent restrictions driving up debt piles.

The increase in rates arrears comes despite the Government offering retail, leisure and hospitality companies a rates holiday since the onset of the crisis. The report shows that councils collected £14.88bn in business rates from firms not eligible for the holiday in the year to 31st March 2021.

Altus says £1.18 billion in rates arrears accrued over the year, taking total rates debt, including existing arrears, to £2.49 billion. The report comes as MPs prepare to debate legislation in Parliament which could rule out coronavirus-related business rates appeals.

Robert Hayton, UK president of property tax at Altus, said “Removing the appeal right from firms is a crushing blow to business”. He went on to describe a replacement scheme as ‘wholly inadequate’, arguing that it ‘won’t deliver enough support quickly enough and will exclude those firms still trading under restrictions’. The Rating Surveyors Association say that the overall value of appeals due to coronavirus are worth around £5 billion to firms in England.

The business rates holiday rolled out to support firms during the pandemic coming to an end on 1st July. From this date and for the remaining nine months of the financial year, relief from the business rate holiday will reduce from 100% to 66%. This is capped at £2 million per business for properties that had to close when the UK entered its most recent national lockdown in January.

Analysis shows that 394,601 businesses have benefitted from the rates holiday, with the initiative saving them around £13.8 billion.