The Chancellor has relented to demands and announced a cut to the planned 5 per cent rise in business rates which was threatening to cripple many small firms.

The decision, which was announced yesterday, means that Councils will be tasked with reissuing

business rate bills reflecting Alistair Darling’s decision to increase the 2009/10 Uniform Business Rate by

2 per cent as opposed to the planned 5 per cent increase.

The Government will instead seek to claw back the lost tax from April 2010 through later Rates increases.

The Business Centre Association (bca), the trade association representing serviced business centres and workspace, has been fighting

he unfair increases on behalf of its members and the businesses they house.

Executive Director of the bca, Jennifer Brooke, says: “This move is a small step in the right direction, but we really

needed to see rate decreases rather than an increase to help businesses in today’s difficult trading conditions.

“On behalf of our members, we have lobbied the Government to freeze the business rate increase to reflect the Retail Price Index,

which is at zero per cent. This Chancellor’s decision still means that businesses are faced with increased bills at a time of restricted cashflow.

“In addition, it is set to cause confusion for local authorities that have already issued rate bills and those small businesses

who will have received bills with thousands of pounds in increased taxes. It is nonsensical that the deferral will not be

granted automatically; we are now in a position where 1.6 million ratepayers will need to apply to their local authority for new payment plans.

“I can only hope that the Chancellor now realises that it is impractical to recover this lost tax, especially in current economic conditions.

“We would also urge the Chancellor to retain the exemption of empty property rates for properties with a rateable value of up to £15,000

for a further period, which will undoubtedly assist small businesses and SMEs.”

Business rates are adjusted every April in line with the Retail Prices Index for the previous September. The new legislation means that businesses can spread payment of this year’s rate increase over three years to reduce the impact on cash flow this year. It will enable approximately £600m to be deferred across 1.6 million properties.

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