HM TREASURY News
Release (PN 33/09) issued by COI News Distribution Service on 31
March 2009
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 designed to 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 this year.
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 period.
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."
Notes for Editors
1. Problems with managing cash flow have been a key concern for
businesses. At PBR, the Government took significant steps to
address this problem:
* For 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.
* PBR 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
* PBR 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 pay no rates in 2009-10.
* PBR 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.
* In 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 2010. To 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.
2. Communities 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 two years.
3. 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.
4. 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.
5. 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.
6. Further information on the implementation of this change can
be found on http://www.communities.gov.uk./
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk
This Press Release and other Treasury publications are available
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