Small Businesses May Get Lifeline From The Council

Local traders suffer from big leap in rates

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Hundreds of local traders have been caught by the phasing out of transitional arrangements limiting the size of the increase in any one year. The protection, which was first introduced in 1990, ran out at the end of March.

In one case a village store in Old York Road was facing a four-fold increase in April 2009 to bring its payments up to the revaluation set in 2005.
Now the council has announced plans to draw up guidelines which would provide help with meeting the higher rates bills for the worst-affected businesses.
Traders who can prove that their business would suffer hardship if they had to pay the full rate rise, could be eligible for a discount on the bill.

Businesses would have to provide up to date accounts and forward business projections to support their claim. The council’s scheme will be the first of its kind in London and uses powers contained in the Local Government Finance Act 1988.

Deputy council leader Maurice Heaster pictured left said:
“The details are still being finalised but we want to focus support on the smaller businesses with the biggest increases. The rate discount will not be automatic - every case will be different. The bottom line will be: does the business need this help to survive in the current economic climate?”

The council is acting after concerns that a scheme deferring rate increases announced this week by the Government did not go far enough. Under the Chancellor’s plan businesses could have their 2009 rate increase capped at 40 per cent with the balance made up over the two following years.
In the case of the Old York Road store this would still leave the proprietor facing an immediate increase of £3,000.

Town hall officials will write to businesses later this month setting out details of how they can apply for discretionary help. Business rates are collected by local councils who then hand the money over to central government. Following the last revaluation of commercial premises in 2005 a four year period was allowed for the increases to be phased in.

Because the annual ceilings on increases have previously been set at between five and 15 per cent for small businesses all the outstanding increase has to be made up in the final year. 2009 is the first year since 1990 when there will be no limit on how much a business rates bill can go up. A further revaluation is scheduled for 2010. The council has told ministers that this should be postponed.

April 8, 2009