Local authorities will have to reissue business rates bills following chancellor Alistair Darling's decision to only raise the 2009/10 Uniform Business Rate by 2%, rather than the planned 5%.
The Uniform Business Rate was set to go up by 5% in 2009/10, linked to last September's rate of inflation in the Retail Prices Index. However, Darling this afternoon announced it would only go up 2%. The government will look to claw back the lost tax from 1 April 2010 by increasing UBR in 2010/11 and 2011/12.
Businesses had argued that a 5% increase in the UBR was unfair as the rate of inflation in the RPI index went to 0% in April. Darling said 1.5m properties would gain from the change and that £600m would be deferred.
The move has caused confusion for local authorities that have already prepared and sent out business rates demands for 2009/10. These bills will now have to be reissued.
The new level of UBR will now be £0.471. Small business with a rateable value up to £21,499 in London and £14,999 elsewhere will be charged at £0.467.
Richard Wackett head of rating at Lambert Smith Hampton, said: 'Whilst this late change in UBR is very welcome, despite the confusion it will create, business must hope that the Chancellor realises over the next twelve months that it is impractical to recover the income forgone and writes off the additional charges for 2010/11 and 2011/12.'
Jerry Schurder, head of rating at Gerald Eve said: 'The deferral of part of the business rate increase due tomorrow is terrific news for business, but why oh why could this decision not have been made a few weeks ago before all the rates bills were issued?
'It is absurd that the deferral will not be granted automatically but that 1.6 million ratepayers will need to apply to their Council to agree a revised payment plan – red tape madness!'