Small businesses ‘missing out’ on rate relief

11 August 2008

Many thousands of businesses are failing to take advantage of relief available under the government’s special rates scheme for smaller firms, it has been claimed.

Eligible businesses in England can claim as much as 50 per cent off their rates bills provided their property has a rateable value of less than £5,000.

As the rateable value of the premises rises so the level of relief declines correspondingly on a scale of 1 per cent for every £100 of rateable value over £5,000 and up to £10,000. When the rateable value reaches £10,000, the relief is 0 per cent. Similar schemes also operate in Scotland and Wales.

However, the relief, which applies to one property only, is not automatic. Businesses must apply to their local authorities to claim the saving.

The Federation of Small Businesses (FSB) has said that many small firms, unaware of the scheme, are not making applications.

As a consequence, as much as £200 million in relief is going unclaimed each year in England alone, the FSB said.

The FSB wants local authorities to be given the power to implement the relief as a matter of course rather than placing the responsibility on firms to make a submission.

Stephen Alambritis of the FSB said: “Given the credit crunch, we believe that there’s an onus on all government agencies that collect money from small businesses to highlight any opportunity for small businesses not to pay so much.”

The government, though, has argued that there are no up-to-date figures that provide a clear picture of how many businesses are claiming the relief.

The Department for Communities and Local Government (DCLG) has calculated that in the year to March some £235 million will be spent on the scheme, as opposed to the £237 million it cost in 2006.

The DCLG added that it is the role of local councils to promote the relief and that details of the scheme are included on business rate bills.

The scheme’s low profile has encouraged some rogue agents to contact small firms promising them a reduction in their rate bills but charging them a substantial fee for doing so.