Firms facing business rates hike

The Government is facing fresh criticism over its plans to abolish business rate relief from next month.

Normally, small businesses struggling to adapt to higher business rates can apply for transitional relief, totalling around £100 million a year. However the scheme will be scrapped from 1 April, leaving tens of thousands of firms with significantly higher rates bills.

The Local Government Association has branded the increase ‘unacceptable’ given that many enterprises are already struggling in the recession, while the Forum of Private Business (FPB) is calling on ministers to reconsider the imminent increase.

All businesses will see their 2009/10 rates bill rise by at least 5% because councils are instructed by the Government to use the Retail Price Index measure at September 2008 rather than the existing 0.1% rate.

According to media reports, some companies could face increases of 1,000% from £190 to £2,200.

‘Increases to rates charges and the spectre of supplementary business rates mean small businesses face another considerable cost burden at a time they can least afford it,’ said the FPB's Chief Executive, Phil Orford.

‘This cannot be justified in an environment of falling sales, deflationary pressure and serious recessionary restrictions.’