Businesses given more time to pay business rates
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Issued 31 March
Businesses will be able spread payment
of this year’s inflation
up-rating to Business Rates over three years, under new legislation
announced by the Government today.
Under existing legislation
business rates are adjusted every April in line with the Retail Prices
Index for the previous September. The new measures are
smooth the effects of the spike in inflation of 5 percent in September,
which would have seen businesses facing an impact on their cash flow
The majority of independent
economists expect RPI inflation - which has now fallen to 0 percent -
to turn negative at the end of 2009. The impact of up-rating
if RPI is
negative would be to reduce total business rates in cash terms in
2010-11. However the Government recognises that many businesses also
need help now to ease cash flow.
Business ratepayers will be
able to defer around £600m across 1.6 million properties, boosting
their cash flow for the current year. This will include measures to
allow those affected by the end of the 2005 transitional relief scheme
also to spread payment of the increase in their bills over a three year
Today’s announcement builds
on other measures to help businesses meet the challenges of the current
economic climate, such as HM Revenue and Customs’ time to pay
arrangements, which have already benefited over 100,000 businesses by
giving them extra time to pay NICs, VAT and corporation tax bills.
The Chancellor of the Exchequer said:
“The Government recognises that
businesses need help now to ease their
cash flow at a time when money is very tight. This measure will help
businesses to smooth their rates payments over the next three years.”
Secretary of State for Communities and
Local Government Hazel Blears said:
"It's vital that we support
businesses as they navigate their way
through this tough financial climate. The steps we are taking today
will provide them with real help now, by giving them the flexibility to
defer part of this year's increase in business rates, and manage the
financial pressures that they are facing.”
Problems with managing cash flow have been a key concern for
businesses. At PBR, the Government took significant steps to
businesses struggling to pay their taxes on time, the HMRC Business
Payment Support Service has, to date, helped 101,135 businesses spread
over £1.78bn of tax payments.
also announced further support for firms that are now making losses by
temporarily extending the carry back of losses from one to three years,
for losses up to £50,000
also announced a temporary increase from 1 April 2009 to the threshold
at which an empty property becomes liable for business rates, from
£2,200 to £15,000. Estimate over 70% of empty properties will
rates in 2009-10.
also announced that British small businesses stand to benefit from £4
billion of EIB funding from 2008-2011 and that £1 billion would be
available by the end of 2008. Confirm that UK banks have secured £1bn
of EIB funds for lending to SMEs and a further £450 million is being
negotiated. Banks are lending this money to businesses across the UK.
January, the Government launched the Enterprise Finance Guarantee, a
£1bn loan guarantee scheme delivered through the banks that will enable
an additional £1.3bn of lending to businesses up to end March
11 March, over 1,000 businesses have been registered as eligible for
support, with a potential lending value of over £110m. In the past week
alone potential lending of over £30m has been registered. Maintaining
this weekly total will mean we are on track to support £1.3billion of
lending to small businesses.
and Local Government will bring forward regulations under the Local
Government Finance Act 1988 to allow businesses in England to spread
payment of their 2009-10 increases in business rates bills over the
three years to 2011-12. As a result, businesses will be able
to pay a
2% annual increase in 2009-10 and the remaining 3% over the following
Arrangements will also be made for a proportion of increases in rates
bills for other reasons, including the ending of transitional relief,
to be deferred over the same period.
The Government will bring the necessary regulations into effect as soon
as possible, and expects that they will be in place by the Summer.
Local Billing Authorities will then write to businesses providing the
option of a revised schedule of payments for 2009-10 bills. In the
meantime, businesses should continue to pay their bills as normal.
This announcement relates to England. The Government will
engage with the Scottish, Welsh and Northern Ireland administrations to
clarify the situation for ratepayers in respect of business property in
Scotland, Wales and Northern Ireland.
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Article Published/Sorted/Amended on Scopulus 2009-04-02 10:26:40 in Tax Articles