What business cost increases are being introduced in April?

For months businesses have been anticipating the impact of a range of tax and regulatory measures announced by the government in the budget and in the weeks since.

They will start to apply to companies, employees and ultimately consumers from April.

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Here we take a look at the various measures imposed either from 1 April, or the start of the new financial year on 6 April.

Business rates

The controversial new business rates regime applies from 1 April.

Chancellor Rachel Reeves said the changes would deliver "permanently lower" rates for retail, hospitality and leisure, paid for by the largest properties, including online retailers' warehouses. Many business groups point out they will still lead to higher bills.

Business rates, paid on bricks-and-mortar premises, are the means by which companies contribute to local government funding and are forecast to contribute £34bn in 2026-27.

Rates are worked out by applying a "multiplier", expressed as pence in the pound, to the "rateable value" of the property.

While the chancellor was right to say she had brought multipliers down, it coincided with the triennial revaluation of business properties, the first since the pandemic, which resulted in dramatic increases in rateable values.

The combination of a smaller multiplier with a much higher value meant higher bills, with publicans and hoteliers claiming average valuation increases of more than 30%.

Faced with a backlash from landlords and political opponents, Ms Reeves announced a 15% cut to rates for pubs and live music venues, plus a two-year rate freeze to mitigate the increases, until the next revaluation at least.

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 that this left them uncompetitive even before the US-Israeli attacks on Iran.

Many will see their bills rise further as a result of an increase in transmission charges associated with expanding and upgrading the grid as part of the energy transition.

Set by the National Grid Energy System Operator, transmission charges cover the cost of transporting high-voltage electricity around the country, including grid upgrades, connecting new renewable sources and balancing supply and demand.

EDF Energy estimates that from this month, transmission charges to businesses will double, adding 5% to electricity bills. Make UK estimate that the average cost to a manufacturer will be £100,000, rising to £250,000 by 2030.

Around 500 "energy-intensive" industrial users are exempt from the increase, meaning it is spread across more smaller companies. The hospitality industry has complained that transmission charges are another unfair cost.

Businesses are likely to see bill increases as a result of the Iran war.

Unlike consumers, there is no price cap for companies, and April will see many renegotiating annual supply contracts just as the price of natural gas, the largest driver of wholesale electricity, has soared.

Minimum wage

April sees the latest increase to the minimum wage. The national living wage for over-21s increases by more than 4% to £12.71, and to £10.85 for 18-20 year olds, an 8.5% hike.

A policy supported by successive governments for almost 30 years, employers have complained that the increases overseen by Labour since coming to office have pushed employment costs too high.

Retail and hospitality businesses, typically large employers of young people, have warned that the new rate could make them disinclined to hire inexperienced younger workers over more experienced staff.

Making tax digital

The government's Making Tax Digital (MTD) reforms apply from 6 April, requiring sole traders and landlords with earnings over £50,000 to file quarterly updates of income and expenditure to HMRC as well as an annual tax return.

While some have complained of the increased bureaucracy for small operations, HMRC say the online process could simplify and speed up the filing process.

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