Council outlines new rate relief scheme for local businesses
Published on Thursday, August 10, 2017
A SCHEME that will help almost 2,000 Leicester business affected by the government’s recent rate revaluation has been announced by the city council.
The council has been given £2.2milllion of government funding over four years to provide a relief scheme to support businesses facing a steep rise in their rates.
This is because the rateable values of all business properties in England changed following a national revaluation effective from April 2017.
While the government has introduced increases and reduction in phases over the next five years, all councils were allocated a share of a £300milllion relief fund to enable them to implement their own, local business rates relief schemes.
Leicester City Council has been allocated £1.3million to use towards this in 2017/18. The new discretionary relief scheme will significantly reduce the limits of increases that smaller local businesses could face in the first year of the scheme.
Leicester businesses with a rateable value of up to £20,000 will see any increase in their net rates bill limited to a maximum of 2%, while those with a rateable value of between £20,001 and £100,000 will see any increase in their rates bill capped at 4.5%.
Increases for businesses with a rateable value of between £101,000 and £200,000 will be capped at 35%. Local firms with a rateable value of over £200,001 will receive no additional local relief but will not pay an inflationary increase of 2% or a small business supplement of 1.3%.
These limits are all more generous that the government’s own phasing scheme.
It is estimated that 1,960 local businesses will qualify for relief under the scheme. Revised bills will be sent automatically and qualifying businesses will not need to apply for the new business rate relief scheme.
City Mayor Peter Soulsby said: “The government’s revaluation of rateable values for businesses means that while some firms will see reduction in their rates bills, others face a sharp rise.
“Our new local business rates relief scheme will provide much-needed support and will focus on smaller and medium-sized businesses that might otherwise face difficulty in paying additional rates.”
Scott Knowles, Chief Executive at East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire), said: “Earlier this year, we wrote to the Chancellor of the Exchequer calling for an urgent and complete overhaul of the ‘broken’ business rates system.
“The current system shackles businesses, discourages growth and is an upfront cost which makes no allowance for a firm’s ability to pay. It discourages improvement of premises and capital investment in plant as the rates are based on the rental value of the property and the plant in it. Although reliefs are available, they are often quite complicated and lack the flexibility needed to encourage upscaling by small margins.
“The Government has pledged that by the end of this Parliament local authorities will retain 100% of business rates collected. If they are allowed to reinvest that money according to local need, offering relief as appropriate and setting the rates to attract inward investment, that will be a positive step towards fixing a ‘broken’ system.
“That Leicester is taking this current initiative to help firms hit by huge rises resulting from Government revaluation is a good step and we applaud it.”
The amount of government funding that Leicester City Council is due to receive from the government will taper off dramatically after the first year of the scheme, with £630,000 allocated for 2018/19, £259,000 agreed for 2019/20, and just £37,000 earmarked for 2020/21.
It is anticipated that all qualifying businesses in Leicester will receive their reduced rates bills in mid-September.