Knowledge Centre
1st April 2009
Chancellor Alistair Darling bowed yesterday to pressure from business groups to halt the immediate effects of the planned 5% business rates increase.
However, the Government is still intending to see the extra money from businesses - instead of paying the entire amount this financial year, firms will be allowed to spread some of the extra tax over the following two years.
The British Retail Consortium (BRC) has been speaking out against the above-inflation rise, urging the Government to scrap the hike, and to abandon the proposal to reverse November's VAT cut.
Business rates are adjusted every April to reflect the Retail Prices Index as it stood the previous September, and the Government said it has introduced the new legislation to "smooth" the effect of the 5% inflationary figure of six months ago.
Under the chancellor's revised scheme, firms will pay 2% more from today for their business rates, and will be able to pay the remaining 3% between 2010 and 2012.
However, while the Treasury is expecting £600 million in deferrals from 1.6 million properties, the deferral is not automatic, and will only come in from August at the earliest, according to the Telegraph.
BRC director-general Stephen Robertson welcomed the last minute action by the Government, but warned that it only amounted to a "first step".
He called for the re-introduction of empty property rates relief, and warned that a range of measures, including business rates revaluation and business rates supplements, would add £1.6 billion to the £5.45 billion bill paid by retailers in 2007/2008.
"With RPI inflation at zero, and expected to turn negative later this year, a five per cent increase was unforgiveable," Mr Robertson added.
"The timing has changed but the eventual costs haven't."
IMAGE Clive Gee/PA Wire
Business rates hike 'smoothed'
However, the Government is still intending to see the extra money from businesses - instead of paying the entire amount this financial year, firms will be allowed to spread some of the extra tax over the following two years.
The British Retail Consortium (BRC) has been speaking out against the above-inflation rise, urging the Government to scrap the hike, and to abandon the proposal to reverse November's VAT cut.
Business rates are adjusted every April to reflect the Retail Prices Index as it stood the previous September, and the Government said it has introduced the new legislation to "smooth" the effect of the 5% inflationary figure of six months ago.
Under the chancellor's revised scheme, firms will pay 2% more from today for their business rates, and will be able to pay the remaining 3% between 2010 and 2012.
However, while the Treasury is expecting £600 million in deferrals from 1.6 million properties, the deferral is not automatic, and will only come in from August at the earliest, according to the Telegraph.
BRC director-general Stephen Robertson welcomed the last minute action by the Government, but warned that it only amounted to a "first step".
He called for the re-introduction of empty property rates relief, and warned that a range of measures, including business rates revaluation and business rates supplements, would add £1.6 billion to the £5.45 billion bill paid by retailers in 2007/2008.
"With RPI inflation at zero, and expected to turn negative later this year, a five per cent increase was unforgiveable," Mr Robertson added.
"The timing has changed but the eventual costs haven't."
IMAGE Clive Gee/PA Wire
Tags: Tax
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