Monday, 9 March 2009

More help needed for Lincolnshire’s small firms during the recession

Call to make business rate relief automatic for small firms

Giles McNeill today welcomed Conservative plans to cut taxes and paperwork for small shops and small firms. In a new initiative, small business rate relief would be given automatically to firms across England, rather than making businesses claim it and complete time-consuming forms. Giles McNeill was speaking as Parliament discusses a Conservative Private Members’ Bill to change the law in this way.

Small business rate relief was introduced in 2005, allowing small firms to claim up to 50 per cent off their business rate bills. However, firms have to fill out paperwork to claim the rate relief, despite the fact that Whitehall’s tax inspectors know precisely which firms are eligible.

• According to the most recent figures, 736 firms claimed small business rate relief in West Lindsey.
• The Local Government Association has estimated that some 870,000 firms are eligible for the rebate but less than half have claimed. The take-up rate is estimated to be 48% in the Midlands.
• By contrast, in Wales, small business rate relief has been automatic since 2007.

After rent and staff, business rates are typically the next biggest cost to local firms. Business experts have warned that 32,300 businesses will fail in 2009. Firms face a hammering this April from the Government thanks to soaring business rates:
• Business rates are to rise by 5.0 per cent in April 2009, despite RPI inflation forecast to be negative this year. This is because of a statistical quirk in the way business rate rises are calculated.
• Transitional relief from the 2005 business rates revaluation has expired, pushing bills up further for many firms in April 2009.
• The Government has slashed back rate relief on empty properties. As the recession bites, firms are unable to rent out vacant property, and have to pay rates in full without any income from rent.

Giles said:
“Small shops and businesses across Lincolnshire are facing tough times in Labour’s recession. These firms, from our corner shops to local pubs, are the lifeblood of our local community. A responsible government would do more to help them.

“Yet Gordon Brown is making it difficult for small firms to claim the tax relief to which they are entitled. He is adding to their misery by finding new ways to drive up business rates by stealth.

“Conservatives would ensure that small firms automatically receive rate relief, cutting their paperwork and tax bills, giving many of them a fighting chance to stay afloat.”

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