WIREDGOV

The Government is currently asking for views on a £2bn relief scheme to support the minority of businesses who could see their rates increase as result of a five yearly revaluation of business property.

While most businesses (60 per cent) will see falls in their rate bills next year following revaluation, some will pay more.

A £2 bn transitional relief scheme will limit and phase in increases to rate bills resulting from the revaluation. The relief scheme is self-financed by businesses by redistributing money collected across the country from business rates. The Government is today consulting and asking businesses how this scheme should be run.

The Government will not collect any extra revenue as a result of the 2010 revaluation.  Regular revaluations ensure the rates each business pays are fair and reflect changes in the relative value of property over time.

Overall, as a result of revaluation and the relief arrangements, one million businesses will see an average decrease of £770 in 2010/11.

• High street retailers will be largely unaffected, with sectors such as shops seeing potential cuts in rate bills - figures show an average one per cent reduction. However, large supermarkets are likely to see increases given their growth in property value since the last revaluation in 2005.
• The industry and manufacturing sector, from large factories down to small workshops and start up units, could see falls of three per cent or £175m.
• All regions could see average rate bills fall or stay the same as a result of revaluation and the relief scheme, except London and the South West, which could on average see respective increases of 3 per cent and 1 per cent after transitional relief. London has seen the highest economic growth of any region, has the highest concentration of businesses, and makes a proportionate contribution through business rates.

Local Government Minister Rosie Winterton said:

"Overall, the effect of revaluation for the majority of businesses could be a reduction in their rate bills next year, with some of the largest decreases in sectors  such as industry and manufacturing.

"But while most will see falls, for the minority with increases we are putting in support to help keep down potential rises and we are today consulting and asking business how this scheme should run.

"This is on top of wider support available to help ease business pressures including discounted rate bills for small business, deferring tax payments and free business health checks."

In today's consultation on the relief scheme, the Government is today proposing caps to bills to ensure that no small business faces a substantial increase. These caps are before inflation, so if RPI is negative in September as forecast, the maximum increases in bills would be lower.

The Government is seeking views on whether to cap increases over five years instead of the current four year scheme. Nearly half a million businesses are expected to benefit from the scheme over the proposed five years. The Government will consult on funding arrangements for the scheme.

Today's announcement is part of a range of actions the Government is taking to support businesses in the current economic climate.

Other measures include the Enterprise Finance Guarantee, helping businesses applying for bank loans; a £75million Capital for Enterprise Fund; Regional Loan Transition funds from Regional Development Agencies; free business health checks, and a commitment from Government to pay suppliers within 10 days.
 
The Government is also encouraging small businesses to apply for small business rate relief, which can help provide up to 50 per cent off their bill.

Notes to editors

1. The consultation will ask for views on whether or not the transitional relief scheme should be changed to run over five years which the Government is proposing, which would benefit 466,700 businesses. It is also consulting on funding arrangements for the scheme. The consultation document can be found at www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010.

2. The Government is proposing caps to ensure no small business faces an increase in its rates bill of more than 5 per cent in 2010-11, with a 12.5 per cent cap on rate increases for medium and large businesses. These caps are before inflation, so if RPI is negative in September as forecast, the maximum increases in bills would be lower.

3. Additionally, separate regulations were laid on (Monday 6 July) to put in place the deferral scheme to defer 60 per cent of this year's inflation-linked increases in bills to the following two years which will be open for applications by the end of July.

4. The table showing the effect of the 2010 revaluation before and after the £2 billion transitional relief scheme can be found in Annex A of the Business rates information letter at www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010.

5. The table showing the breakdown of the effect on the retail sector of the 2010 revaluation, before and after the transitional relief can be found in Annex A of the Business rates information letter at www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010.

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