New work by CLG analysts, published on 9 December 2009, shows that take-up of small business rate relief (SBRR) is much better than some have previously claimed. The report “Small business rate relief—improving evidence on eligibility and take-up: Methodology” is available at:
http://www.communities.gov.uk/publications/localgovernment/smallbusinessmethod
and estimates that, of the around 1.2 million business properties in England below the current rateable value (RV) thresholds for SBRR, around 575,000 are occupied by eligible small businesses; and around 68 per cent. of those eligible were actually claiming the relief at 31 December 2006, the latest date for which we have information on the number of claimants.
This estimate of the number of properties claiming the relief will be updated for 2008-09 following the issue of the statistical release “Number of hereditaments benefiting from Small Business Rate Relief and the number of empty hereditaments: experimental statistics” that will be published on the Communities and Local Government website at the end of February.
This means that an estimated 32 per cent. of properties occupied by eligible small businesses were not claiming the relief as at December 31 2006. The total amount of relief granted to small businesses has increased by 34 per cent. in real terms since we introduced the scheme— rising from £202 million in 2005-06 to £298 million in 2008-09. The new analysis estimates that in 2008-09, of the £325 million total relief that would be granted if all 575,000 eligible properties had claimed, 92 per cent. was actually paid out.
We have taken action to make it as easy as possible for eligible small businesses to access the relief and so improve take-up. In 2007 we removed the requirement for claimants to re-apply each year, so that a small business only had to apply once in each revaluation period. And on December 9 2009 we laid before Parliament an Order to remove the requirement to re-apply for SBRR at revaluation in 2010, a move which has been welcomed by the Federation of Small Businesses.
There is no additional levy added to the business rate multiplier to take account of estimated losses for appeal for each individual year. The business rate multiplier is calculated in a revaluation year according to the formula at schedule 7 of the Local Government Finance Act 1988.
The formula allows for the total rateable value of the ratings lists to be adjusted to take account of estimated losses in appeals. The subsequent multiplier for each year of the 2005 ratings list following the 2005-06 revaluation year was adjusted just by the RPI inflation.
The calculation of the 2005-06 multiplier including an adjustment for estimated losses in appeals is set out in the Business Rates Information letter that I have put in the House Library.
The five-yearly business rates revaluations make sure each business pays its fair contribution and no more by ensuring that the share of the national rates bill paid by any one business reflects changes over time in the value of its property relative to others. The 2010 revaluation will not raise a single extra penny for Government.
Over a million properties will see their business rate liabilities come down as a result of revaluation. The Government have put in place a £2 billion relief scheme to limit the impact on the minority with bill increases, which in 2010-11 will ensure no business property sees its rates bill increase by more than 11 per cent. as a result of the revaluation, with maximum increases capped at just 3.5 per cent. for small properties. That is on top of the wider support available to help ease business pressures including discounted rate bills for small businesses and deferring tax payments.