Tax & admin · 30 May 2017

Business rates relief delay hitting most vulnerable small firms

Business rates review
Business rates continue to put small firms at risk
Thousands of small UK firms continue to pay too much in business rates, having not yet received the relief they’re entitled to almost three months after the Spring Budget, and two months since the start of the new tax year, research has found.

Despite 25m of government funding having been earmarked for small business rates relief in 2017, a lack of coordination between central government and local UK authorities has meant that owners at some of the country’s most vulnerable smaller firms have yet to receive any cash benefit from new business rates relief, putting many at risk of bankruptcy.

The chancellor, Philip Hammond, introduced a new 115m business rates relief scheme at his Spring Budget in March to help reduce the impact of the 2017 business rates revaluation the first in the UK for seven years.

However, it was not made clear how the scheme was to be administered at the local level and, several months later, local authorities are still waiting for new business rates relief guidance from central government, whilst small business owners continue to pay extortionate unrevised business rates.

In March, a letter to all local UK councils from the Department for Communities and Local Government?(DCLG) outlined that Whitehall expected local authorities to proceed with granting new levels of business rates relief to qualifying business owners, promising council heads theyd be reimbursed at a later date.

The letter read: The government expects billing authorities to grant supporting small business relief to qualifying ratepayers” adding?”the government is not changing the legislation and will reimburse billing authorities”.

However, local UK authority leaders received no further guidance on how new funding for business rates relief should be allocated and, although they’re legally able to adjust business’ tax bills, have had no assurances of how funds granted to businesses under the new scheme would in fact be reimbursed.

In a recent statement about new business rates relief, a spokesperson for the London Borough of Tower Hamlets said: “We are waiting for the government to confirm the funding regulations for the scheme. When they do, we will be able to allocate funds to eligible businesses.”

Meanwhile, a spokesperson for another local UK authority Darlington Borough Council said: “We are awaiting further guidance from the DCLG to allowour system to be upgraded, which will now be after the general election.”



Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.