Changes to Small Business Rate Relief could have sting in the tail, warns small firms' champion
  26 November 2010    
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Changes heralded as making Small Business Rate Relief (SBRR) apply ‘automatically' could instead lead to councils scrapping the tax break altogether, the Forum of Private Business and property specialist LeaseholdersUnited are warning.
 

The upcoming Localism Bill will end the requirement for businesses to fill in an application form to claim the relief. Instead, the Small Business Rate Multiplier will automatically apply to eligible firms and, according to a government statement, ‘councils will be free to administer Small Business Rate Relief in a way that best serves local businesses and local needs'.

Following its decision to increase SBRR from October 2010, the Government hopes the move will help businesses access the £200 million in rate relief unclaimed each year. However, the Forum is concerned that it could instead jeopardise some of the £500 million per year that businesses are already able to claim.

The Forum's Property Adviser, LeaseholdersUnited's Andrew Bacon said that small businesses taking on five-year leases and paying rents based on the assumption that they will be entitled to automatic Small Business Rate Relief throughout that period could be in for a surprise.

"The recent announcement regarding Small Business Rate Relief has only made the Small Business Rate Multiplier automatic, which will result in a 2% drop in rate liability for businesses which haven't claimed - a trivial sum," explained Mr Bacon.

"Removing the need to fill in a form to claim SBRR is only a ‘positive' if SBRR is genuinely made automatic, as it is in Wales. But that is not what is being proposed. It is now to be granted at the discretion of councils."

He added: "If the Localism Bill also makes councils collect extra rates under the Business Rate Supplement scheme in order to pay for SBRR, or allows them to keep what they collect in rates, granting SBRR becomes a budgetary decision for councils. If they don't have the cash, or can't raise it through the supplement, local businesses won't get SBRR. 

"As we are still facing an extremely tough economic climate, the upshot of this could be that SBRR disappears, with small businesses being £500 million worse off. If it is no longer going to be automatic and will be at the whim of a council, they need to be told this."

The Forum has repeatedly urged the Government to allow the relief to apply automatically to counter the problem of a lack of awareness among business owners. The not-for-profit organisation has also called for councils to be given greater discretion to help struggling local businesses.

"We welcome the principle of giving councils more powers to assist struggling small businesses, but £200 million in rate relief already goes unclaimed each year. If SBRR is sacrificed by cash-strapped local authorities as a budgetary decision the proposed changes risk making the problem worse, not better," said the Forum's Head of Campaigns, Jane Bennett.

"It is the responsibility of the Government to clarify that it is the Small Business Rate Multiplier that will apply automatically, rather than the full relief itself, in order to allow business owners to plan ahead properly."

The Forum helps its members save money and manage their finances through its 'Finance Director' business support solution.

Through the solution, the not-for-profit organisation provides its members with expert advice on issues such as reducing business costs, improving credit ratings, business monitoring and business insurance.

Forum members receive a 50% discount on LeaseholdersUnited's property cost control services, which represents a saving of up to £150 a year.

To discover if they are eligible for SBRR, businesses can access LeaseholdersUnited's eligibility calculator here. 

For more information about the Forum's member benefits, campaigns and lobbying call 0845 612 6266 or visit www.fpb.org.



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