Department for Communities and Local Government
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Eric Pickles - Help to lift small business tax break take up
Small businesses and local shops will find it easier to get their tax cuts as the Government scraps form filling rules to help increase take up, Local Government Secretary Eric Pickles announced today.
The normal tax discount for small businesses, known as Small Business Rate Relief, has already been doubled this year, but the Government also wants to help as many as possible claim the discounts they are eligible for.
Mr Pickles is clear that helping small shops and businesses grow is a crucial part of rebalancing and rebuilding the economy.
"We have already doubled the rate discount small businesses get, but we want to see as many small business ratepayers as possible to claim their tax cuts so we will change the rules so councils can administer the scheme without being caught up in unnecessary Government red tape."
To help eligible businesses claim their tax cut in the future new measures in the upcoming Localism Bill will end the legal requirement for ratepayers to fill in an application form first. Councils will be free to administer Small Business Rate Relief in a way that best serves local businesses and local needs.
The Government will also amend secondary legislation to ensure that all eligible businesses automatically have their discounted bills calculated using the small business multiplier.
The Government is already helping an estimated 500,000 ratepayers who are eligible for Small Business Rate Relief by doubling the normal discount for next year, worth £390 million. Approximately 345,000 of those could pay no rates at all.
Mr Pickles said:
"Small shops and businesses are crucial to the country's economy and we know they were hit hard by the financial legacy left us. All too often the tax support Government offers is tied up in so much red tape small businesses are put off from getting it. As we rebalance the economy we are determined to give them a helping hand.
"We have already doubled the rate discount small businesses get, but we want to see as many small business ratepayers as possible to claim their tax cuts so we will change the rules so councils can administer the scheme without being caught up in unnecessary Government red tape.
"We shall also let councils set discounts locally and we are considering proposals to let them keep what they collect. This will give councils a genuine financial stake in their local economy and let them target their support at local shops, pubs, post offices and start-up enterprises."
The Government has set out radical new proposals to look at ways for Local Authorities to keep the business rates they collect locally. These would give councils genuine incentives to promote local economic growth, and give them a greater stake in their local economies.
The Government will also give councils the power to set local discounts on business rates, provided that they are funded locally. This will give councils the ability to respond to local circumstances such as supporting the local pub or post office if they are struggling or encouraging new start-up enterprises.
Other measures to support business in the upcoming Localism Bill will include increased powers for businesses to hold a ballot on Business Rate Supplements. This will allow liable businesses to vote for and in effect approve the planned economic development project that they will be funding. Legislation will also be introduced to officially cancel the frozen backdated ports taxes. This will help many port-based businesses that faced the threat of balance sheet insolvency after being hit with significant and unexpected backdated business rates bills in 2008.
Notes to editors
1. Currently, small businesses in England are generally entitled to small business rate relief if they occupy only one property and the rateable value of that property is less than £18,000 (£25,500 in London).
2. All businesses meeting that criteria are eligible to have their rates calculated using the small business rates multiplier. Additionally, properties with rateable values of less than £6,000 are entitled to fifty per cent relief. Properties with rateable values between £6,000 and £12,000 receive tapered relief.
3. Legislation will be introduced through the localism bill to remove the legal requirement for eligible ratepayers to submit an application form. Secondary legislation will also be amended to ensure that all eligible ratepayers below the £18,000 (£25,500 in London) rateable value threshold have their bills calculated using the small business multiplier, regardless of the number of properties that they occupy. The legislation applies to England only.
4. The Budget announced that between 1 October 2010 and 30 September 2011, eligible ratepayers will receive small business rate relief at one hundred per cent on properties up to £6,000 (rather than fifty per cent), and a tapering relief from one hundred per cent to zero per cent for properties up to £12,000 in rateable value for that period.
5. The Government will amend the Business Rate Supplement Act 2009 to ensure that all future Business Rate Supplement projects, both where they fund more or less than a third of the overall project, will have to be put to the ballot so that liable businesses can decide whether to impose the Business Rate Supplement upon themselves. Currently projects where the Business Rate Supplement funds less than one third of the overall costs do not require a ballot - over one third a ballot is required. To ensure all Business Rate Supplement projects have to ballot businesses - primary legislation is required to alter the 2009 Act which will ensure that projects where Business Rate Supplement funds less than on third have to ballot businesses.
6. Legislation will also be introduced to cancel backdated business rates bills for newly assessed properties split from larger rateable properties that are eligible for the eight year payment schedule.
7. Charities and community amateur sports clubs can get their business rates bills reduced by at least eighty per cent - which can be toped up to one hundred per cent at the discretion of the relevant local authority. Other non-profit organisations can apply for up to one hundred per cent discretionary relief and certain rural businesses may be able to claim rural rate relief. Further details can be found at the following link: http://www.businesslink.gov.uk.
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