Thank you - Darling?

With unbelievable timing, the Chancellor made a well-publicised press announcement on the 31st March offering businesses the chance to defer their business rates payments This was after all Local Authorities had sent out their rate demands for rate year 2009/2010!

Roderick Bisset our rating expert has looked at the proposed scheme in a little more detail:

“Firstly we have learnt that the amount that is being offered as a deferment is 60% of the increase in liability between this year and last year. For example let’s assume your property is occupied and has a Rateable Value of £20,000.

Example 1. Current Situation 2008/09 £20,000 RV x £0.462 = £9,240 payable 2009/10 £20,000 RV x £0.485 = £9,700 payable Increase of £460

So the amount of deferment being offered is only 60% of the £460 increase, which equates to £276 for rate year 2009/10. This will then be re-charged, over the next two rate years in equal amounts and without penalty, as follows:

Deferment scheme implemented 2009/10 £9,700 - £276 = £9,424 payable 2010/11 add the deferred £138 2011/12 add the deferred £138

The above example shows very little advantage and you may find the ‘financial benefit’ is outweighed by the ‘administrative burden.

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However, if you received Transitional Relief in 2008/09, then the deferment scheme may look more attractive.

Example 2. Current Situation 2008/09 £20,000 RV with Transitional relief = £6,000 payable 2009/10 £20,000 RV no Transitional relief = £9,700 payable Increase of £3,700

So the amount of deferment being offered is 60% of the £3,700 increase, which equates to £2,220 for rate year 2009/10

Deferment scheme implemented 2009/10 £9,700 - £2,220 = £7,480 payable 2010/11 add the deferred £1,110 2011/12 add the deferred £1,110 Savings for rate year 2009/10 = £2,220 (£9,700 - £7,480)

Roderick Bisset advises you to:

1) Pay the current rates bill as demanded (if you are in arrears; you will be excluded from the scheme) and wait for the Charging Authority to formally offer the deferment scheme to you.

2) If you received Transitional Relief last year and the liability increase is large for this year; then I recommend you consider the deferment option. BMH can provide further advise.

3) In cases where the savings are very small, beware of complicating the administration of your business rates payments scheme, as a missed or incorrect payment can result in further costs awarded against you. These potential penalties will often outweigh the benefits of the scheme in the first place.