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Business rates: what Darling’s decision means for you

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Chancellor Alistair Darling has provided some small relief to beleaguered small businesses by announcing that the planned five per cent rise in business rates is to be staggered. The initial rise is limited to two per cent. The other three per cent is to be phased over the next two years. This is “a real and genuine help”, reports the Press Association, with a nice dash of understatement.

In its useful factsheet on the impact of this change, the Federation of Small Businesses (FSB) highlights these key points:

Businesses should pay their monthly instalments of business rates as per their current bills Once the regulations are in place, local authorities will write to rate payers, offering them the option of deferring part of the increase. This is likely to be in the summer. No need for businesses to contact anyone at this stage. The new bills will give the benefit of deferral based on the total increase in the 09/10 bill. For 2010/11 and 2011/12 bills, local authorities will add the deferred amounts. The effect is to provide a smoother profile of business rates payments over the next three years. RPI is widely forecast to be negative later this year, which would have a downward pressure on 2010/11 bills. This scheme offers businesses the chance to pay a lower increase in 2009/10, and make up the payments in the following two years.

Daily Telegraph enterprise editor Richard Tyler reveals that councils won’t be able to send out the relevant correspondence until late-summer (according to the Local Government Association), so businesses will have to pay the five per cent rise until then.

Quoted in the FT, Jerry Schurder of surveyors Gerald Eve, the surveyors, said there would be “red tape madness” as 1.6 million ratepayers applied to their councils for a revised payment plan.

How will your business be affected by this change? Positive, negative, confused? Let us know by posting your comments.

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