Covid: £2.5bn business rates debt looms over local councils, new analysis says
UK firms now owe local councils nearly £2.5bn in unpaid business rates, according to new analysis, as the national debt crisis swells.
Countless firms have seen their debt climb higher over the pandemic period, with many businesses stifled by restrictions and forced to shut their doors for several months.
As relief, the government has offered retail, leisure and hospitality companies a business rates holiday, which will last until March 2022.
However, analysis by real estate advisory group Altus has found that rates arrears have increased despite the government’s financial support measures.
From firms not eligible for the holiday, local councils raked in £14.88bn in business rates in the year to 31 March 2021.
Altus said that the figures revealed £1.18bn in rates arrears that have accumulated over the year, taking total rates debt, including arrears from previous years, to £2.49bn.
The looming debt burden is expected to knock office operators and industrial firms particularly – firms that still have to pay full business rates but have been knocked heavily by Covid-19.
The business rates debt adds on to the over £5bn in rent debt arrears, which has hit hospitality and retail businesses hard.
Business rates appeals
The new figures come as MPs prepare are set to debate coronavirus-related business rates appeals legislation in parliament today.
UK president of property tax at Altus, Robert Hayton, said: “Removing the appeal right from firms is a crushing blow to business.
“The replacement scheme is wholly inadequate – it won’t deliver enough support quickly enough and will exclude those firms still trading under restrictions.
“This Bill threatens the post-pandemic recovery and undermines the whole rating system.”