In a new initiative, small business rate relief would be given automatically to firms across England, rather than businesses having to claim it and complete time-consuming forms. This pledge comes as Mid-Worcestershire MP Peter Luff's Private Members Bill was withdrawn last Friday after it failed to gain government backing.
Small business rate relief was introduced in 2005, allowing small firms to claim up to 50 per cent off their business rate bills. However, firms have to fill out paperwork to claim the rate relief, despite the fact that Whitehall's tax inspectors know precisely which firms are eligible for it.
- According to the most recent figures, 861 firms claimed small business rate relief in Malvern Hills in Tax Year as at Dec 2006, while 866 claimed for it in Wychavon.
- The Local Government Association has estimated that some 870,000 firms are eligible for the rebate but less than half have claimed. The take-up rate is estimated to be 48% in the Midlands.
- By contrast, in Wales, small business rate relief has been automatic since 2007.
After rent and staff, business rates are typically the next biggest cost to local firms. Business experts have warned that 32,300 businesses will fail in 2009. Firms face a hammering this April from the Government thanks to soaring business rates:
- Business rates are to rise by 5.0 per cent in April 2009, despite RPI inflation forecast to be negative this year, due to a statistical quirk in the way business rate rises are calculated.
- Transitional relief from the 2005 business rates revaluation has expired, pushing up bills further for many firms in April 2009.
- The Government has slashed rate relief on empty properties. As the recession bites, firms are unable to rent out vacant property, and have to pay rates in full without any income from rent.
Harriett Baldwin said:
"I would like to congratulate Peter Luff MP on the progress he made with his Private Member's Bill in highlighting this important issue. Small shops and businesses across West Worcestershire are facing tough times in Labour's recession. These firms, from our corner shops to local pubs, are the lifeblood of our community. A responsible government would do more to help them and Peter Luff MP is right to push the government to include this measure in a package of measures to help small businesses.
"If the government does not act, it is good that a Conservative government would ensure that small firms automatically receive rate relief, cutting their paperwork and tax bills and giving many of them a fighting chance to stay afloat."