Firms are being reminded that April could see a number of possible rises in business rates.
The British Retail Consortium (BRC) has said that the latest rates revaluation, which is conducted in England every five years and is based on the cost of renting commercial properties, takes effect from 1 April.
Business rates are also subject to an annual inflationary increase, calculated according to the previous September’s retail price index measure of inflation.
The inflation figure for September 2008 was a steep 5 per cent. Although the government allowed firms to defer up to two fifths of the annual increase due for April 2009 for two years, as a way of helping to defray the costs, many businesses will now have to accommodate the extra charges on their rates bills this year.
The BRC has urged the government to reappraise the costs and to implement only affordable increases.
Stephen Robertson, the BRC’s director general, said: “April’s property tax hikes, including business rates revaluation, will hinder retailers’ vital role in contributing to the recovery.
“We supported the announcement in the Budget to give the smallest shops a year’s business rates holiday, but there was no help for larger retailers. Property taxes should be made affordable for all retailers – regardless of their size.
“And we need compulsory business ballots to prevent Business Rates Supplements being abused by local authorities and a full restoration of rates relief on all empty properties.”
The issue may be further complicated by the thousands of firms that could find themselves no longer eligible for the small business rates relief scheme.
The scheme reduces by up to 50 per cent the rates bills of businesses that occupy premises that have a rateable value below £12,000.
However, the five-year revaluation may push a number of smaller firms above the £12,000 threshold.
The concern is that the transitional rate relief scheme, introduced to help cap the rate rises that are a consequence of the revaluation process, will not apply to the loss of small business rate relief.
A spokesman for the Department for Communities and Local Government was reported as saying that “transitional relief is designed to limit increases in bills that result from the revaluation, it does not offer protection from increases due to a change or loss of small business rate relief”.
In his Budget, the Chancellor announced that, as from October 2010, qualifying small businesses that occupy premises with rateable values up to £6,000 won’t pay any business rates for a year. Other small businesses that receive tapered rate relief on premises with values up to £12,000 should enjoy a cut in their rates’ bills too.
It is estimated that about seven in ten of qualifying firms actually claim small business rates relief.
Businesses in England need to apply to their local councils for the relief. Similar schemes are run in Scotland and Wales.