Increase in business tax rate abandoned at last minute

| April 1, 2009 | 0 Comments

A last minute U-turn has meant that the Chancellor, Alistair Darling, has not pressed ahead with the planned increase of business rates on 1.6 million properties, which were expected to increase by 5 percent today.

The surprise announcement came after sustained lobbying from small businesses who revealed that such a hike would mean that many thousands of companies would go under.

In a bid to help companies through the recession, local business taxes are to rise by only 2 percent, with effect from today, and in order to spread the burden, the three percent that is remaining can be spread across two years in a measure, which Mr Darling described as “being of real and genuine help“.

The level of the annual increase was based on the level of the Retail Price Index in September, which was more than 5 percent, but has since fallen to zero with analysts predicting that it will fall further.

The move has meant a lot of confusion for local authorities that have already prepared and sent out the new business rates at 5 percent, so bills will now have to re-calculated.

The deferral will not be issued automatically but rate payers are advised to seek a new payment plan from their local council.

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