Partner Article

Business rates hold gets mixed welcome

Chancellor Alistair Darling’s announcement this week that the planned rise in business rates of 5% will be staggered over the course of the next two years has received a mixed welcome in the North East.

“This measure will help businesses to smooth their rate payments over the next few years to deal with the effects of the recent spike in inflation,” said Mr Darling.

The announcement comes after the Chancellor faced rising anger from business groups and landlords against the 5% rise in business rates. If the rise had of been fully implemented it would have been the largest increase since the system was introduced in the early 1990s.

Colin Stratton, FSB Regional Chairman for the North East, said: “The announcement by the Chancellor will come as welcome relief for many of our members in the North East. Basing an increase in business rates on inflation data from last year would have added to the increase in costs already faced by many small businesses. Business rates are the third highest expenditure for small businesses after rent and wages.

“The Chancellor must now take the bold step in the Budget to make small business rate relief automatic across England as it is in Scotland and Northern Ireland. This would provide valuable extra finance for many of our members at no extra cost to the Government or the tax payer.”

Although the move has been welcomed by some, there is anger that the relief will not be automatic and that it will be available from August at the earliest, meaning that businesses will have to pay the rate bills they have already been sent by local authorities.

Richard Farr, Director of Rating at surveyors Sanderson Weatherall, said: “The Chancellor’s eleventh hour intervention is more spin than substance. There is no reduction in rates liability for anyone, only deferment of part of the unwarranted 5% increase, which will itself be deferred for at least four months. The administrative cost and burden will be huge and the whole scheme will be a further opportunity for unscrupulous cowboy advisers to exploit already hard-pressed businesses.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .