Which business costs are increasing in April?
For many months businesses have been anticipating the impact of the budget and a range of tax and regulatory measures announced by the government in the weeks following.
They will begin applying to companies, employees, and eventually consumers in April.
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Here we take a look at the various measures imposed as of April 1, or the start of the new financial year on April 6.
business rates
The controversial new business rate regime comes into effect on April 1st.
Chancellor Rachel Reeves said the changes would lead to “permanently lower” rates for retail, hospitality and leisure, which would be paid by the online retailers’ largest properties, including warehouses. Many business groups say that would still result in higher bills.
Business rates, paid on brick-and-mortar premises, are the means by which companies contribute to local government funding and are projected to contribute £34bn in 2026–27.
The “rateable value” of the property determines the rates, which are calculated by applying a “multiplier” expressed in pence per pound.
While the Chancellor was right to say that they have reduced multipliers, it coincides with the triennial revaluation of commercial properties, which occurred for the first time since the pandemic, resulting in a dramatic increase in rateable values.
The combination of a small multiplier with very high prices meant higher bills, with publicans and hoteliers claiming an increase of more than 30% in the average valuation.
Facing opposition from landlords and political opponents, Ms Reeves announced a 15% rate cut for pubs and live music venues, as well as a two-year rate cut until at least the next revaluation to offset increases.
Read more: All the changes in April that will affect your money
energy
British businesses already face the highest energy prices in the developed world, with many manufacturers complaining it made them uncompetitive even before the US-Israeli attacks. Iran.
Many people will see further increases in their bills as a result of increases in transmission charges associated with grid expansion and upgrades as part of the energy transition.
Set by the National Grid Energy System Operator, transmission charges cover the cost of transporting high-voltage electricity across the country, including grid upgrades, adding new renewable sources, and balancing supply and demand.
EDF Energy estimates that transmission charges for businesses will double from this month, leading to a 5% increase in electricity bills. The UK estimates the average cost of a manufacturer will be £100,000, rising to £250,000 by 2030.
Around 500 “energy-intensive” industrial users are exempt from the increase, distributing it among smaller companies. The hospitality industry has complained that transmission charges are another unfair cost.
Businesses are likely to see an increase in bills as a result of the Iran war.
Unlike consumers, there is no price cap for companies, and many annual supply contracts will be renegotiated as the price of natural gas, the biggest driver of wholesale electricity, rises in April.
Iran war ‘likely to exert upward pressure’ on inflation
minimum wage
April saw the latest increase in the minimum wage. The national living wage has increased by more than 4% to £12.71 for people over 21 and £10.85 for 18-20-year-olds, a rise of 8.5%.
A policy supported by successive governments for nearly 30 years, employers have complained that increased labour supervision since coming to office has driven up employment costs too much.
Retail and hospitality businesses, typically large employers of young people, have warned that the new rate could make them reluctant to hire inexperienced young workers compared to more experienced staff.
making tax digital
The government’s Making Tax Digital (MTD) reforms come into effect on April 6, requiring sole traders and landlords with incomes over £50,000 to file quarterly updates of income and expenditure as well as annual tax returns with HMRC.
While some have complained about increasing bureaucracy for small tasks, HMRC says the online process can simplify and speed up the filing process.
