Business rates deferral scheme: Q&A for rate payers

18 August 2009

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Earlier this year, the Government announced that it would defer the 5% increase in business rates, by allowing businesses the chance to pay a lower 2% increase in 2009/10, and make up the remaining 3% in the following two years. As of 31 July 2009, businesses can now apply to to their local council to defer. Read on to find out how.

What has been announced?

The Government is allowing business rate payers to defer payment of 60% of the increase in their 2009-10 rates bills until 2010-11 and 2011-12. This is meant to give you the flexibility to manage your rates bill in the current economic climate.

What do I need to do now, to defer the increase in my rates bill?

Your billing authority will write to you offering you the option to defer payment of 60% of the increase once the necessary to regulations have been put in place. If you haven't received a letter from your billing authority, you can download an application form here.

Can I start paying the reduced amount now?

By now, your billing authority should have written to you, the rate payer, offering you the option to defer payment of 60% of the increase once the necessary changes to regulations have been put in place (see above).

Until that time, you must keep paying your legally established liability as set out on your current bill.

Most of the increase in my bill is due to the end of transitional relief rather than Retail Prices Index (RPI) inflation. Can I defer 60% of that increase too?

Yes.

How do I claim this help?

When your billing authority will write to you from 31 July 2009, you just need to let them know that you would like to defer payment of 60% of the increase. Application forms can be found here.

Do local authorities have to allow me to defer payment?

Yes. Deferral will be available on request from the rate payer.

Will I have to defer payment?

No. You will have the option of deferral to help you manage your bills, but it will be up to you whether you take up that option.

How long can I defer for?

The deferred liability will be repaid over two years. You will pay 50% of the deferred amount in 2010-11 and the other 50% in 2011-12.

How much will the average business benefit?

A business paying a rates bill on a fairly typical property seeing a £600 rise in its 2009/10 rates liability would be able to defer £360 of that increase to future years.

Will businesses be allowed to defer in future years?

The Government has no plans to allow businesses to defer their 2010/11 liability. However, the position will be kept under review.

I have already paid my annual business rates. Can I have a refund?

No. Deferral is only available in respect of rates that have not already been paid.

How will this be administered?

Local billing authorities are responsible for billing and collection, and will therefore be responsible for administering any deferral and adding the deferred amounts to 2010/11 and 2011/12 bills.

What is the legislation behind this?

The Government has brought forward regulations under the Local Government Finance Act 1988.

Will this mean that local authorities will receive less grant?

No. Central Government will ensure that grant allocations remain unaffected by this help.

Will this just place extra costs on local authorities?

No. Any new costs for local authorities will be considered a new burden and will be funded by central Government, using the same mechanism as for the recent mailshot to business rate payers about the 2010 revaluation.

Will this apply in the devolved administrations?

That is a matter for the devolved administrations.

Will local authorities have to fund the difference by supplementing the rates pool or reduced funding from Central Government?

No. Any new costs for local government associated with this change will be funded by central Government. The change will not affect local authority formula grant allocations and local authorities will be able to reflect the new arrangements in their contributions to the pool.

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