Government confirms majority of business rate bills will fall

The majority of business rate bills - one million in total - will fall next year as a result of revaluation, the Government confirmed today.

The Government will not collect a penny more of extra revenue as a result of the 2010 revaluation. Regular revaluations ensure the rate each business pays is fair and reflects changes in the relative value of property over time.

The final arrangements for calculating new business rates bills are being published today. Most business properties (60 per cent) will see falls in their rate bills next year.

For the minority paying more, the Government is putting in place a £2bn relief scheme self funded by businesses that will limit and phase in increases. The Government is today giving the go ahead for the relief scheme following a consultation.

Overall, as a result of revaluation and the relief arrangements, one million business properties will see an average decrease of £770 in 2010/11.

The Government recently announced that it will remove the requirement to re-apply for small business rate relief at revaluation reducing bureaucracy for small businesses and billing authorities - a move welcomed by the Federation of Small Businesses.

Local Government Minister Barbara Follett said:

"Revaluation makes sure each business pays its fair contribution and no more - it will not raise a single extra penny for Government.

"As a result of revaluation, a million business properties will see an overall reduction in their rate bills next year, with some of the largest decreases in sectors such as industry and manufacturing.

"While the majority of businesses will see benefits on their accounting sheets from revaluation, for the minority with increases we're today giving the go ahead for a £2bn relief scheme to limit the impact on bills.

"This is on top of the wider support available to help ease business pressures including discounted rate bills for small businesses and deferring tax payments."

Measures the Government has taken to support businesses in the current climate include enabling businesses to delay their corporation tax, VAT and other payments; the Enterprise Finance Guarantee, helping businesses applying for bank loans; a £75m Capital for Enterprise Fund; Regional Loan Transition funds from Regional Development Agencies; free business health checks, and a commitment from Government to pay suppliers within 10 days.
 
The Government is also encouraging small businesses to apply for small business rate relief, which can help provide up to 50 per cent off their bill.

Commenting on today's announcement, Matthew Goodman from the Forum of Private Business said:

"We believe that it provides a fair and balanced system of transitional relief while at the same time supporting those small businesses who may struggle with an increased rate bill."

Rateable values are only one part of the rates bill. The other is the ratings multiplier - which is applied to calculate final bills. Today the Government is announcing the multiplier has been reduced by 15 per cent - taking it to its lowest level for 17 years. This is designed to ensure the Government does not collect an extra penny from revaluation and that each business pays its fair contribution.

Notes to editors

1. The regular 5 yearly revaluation of business properties ensures that all businesses are paying the correct rate bills and not a penny more. Revaluation is revenue neutral so it does not raise any additional money for Government.

2. The Government is today giving the go ahead to a £2bn rate relief scheme to support the minority of business facing increases on their rate bills. The caps will mean after inflation the maximum increase next year for small properties will be only 3.5 per cent and for larger properties it will be 11 per cent.

3. Overall as a result of revaluation and transitional relief arrangements:

• High street retailers will be largely unaffected, with sectors such as shops seeing potential cuts in rates bill - figures show an average one per cent reduction. However, large supermarkets are likely to see increases given their growth in property value since the last revaluation in 2005
• The industry and manufacturing sector - from large factories down to small workshops and start up units could see falls of three per cent or £175m
• All regions could see average rate bills fall or stay the same as a result of revaluation and transitional arrangements, expect London and the South West, which could on average see respective increases of 3 per cent and 1 per cent after transitional relief. London has seen the highest economic growth of any region, has the highest concentration of businesses, and makes a proportionate contribution through business rates.

4. The Government has put in place a comprehensive range of support for businesses offering support in the current economic climate - see details at www.info4local.gov.uk/realhelpnow/ (external link).

5. The table showing the effect of the 2010 revaluation before and after the £2bn transitional relief scheme can be found in Annex A of the Business rates information letter at www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010.

6. The table showing the breakdown of the effect on the retail sector of the 2010 revaluation, before and after the transitional relief can be found in Annex A of the Business rates information letter at www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010.

7. The Government's response to the consultation on transitional rate relief can be found at www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010responses.

8. Business owners are urged to check the details of their draft rateable value and get in touch with the Valuation Office Agency if there are any errors so that they can be corrected immediately. New business rates bills are calculated using  the rateable value and they will be going out early next year so it is important to get any issues resolved now. It is not necessary for ratepayers to employ an agent to make any corrections - ratepayers can do this quickly, easily and free of charge by just contacting the VOA.

Twitter

Keep up to date with the Department by following us on Twitter (external link).

Media enquiries

Visit our newsroom contacts page for media enquiry contact details.