Retail businesses have been given a temporary reprieve on their business rates thanks to a last-minute decision by the government.

The decision to defer the 5% increase due to start today (April 1) means small stores will not immediately have to pay the new rates, but the cost increase is delayed rather than reversed. Businesses can defer payment of 60% of the increase in their 2009-10 business rate bills until 2010-11 and 2011-12.  

Announcing the scheme, chancellor Alistair Darling said: “The government recognises that businesses need help now to ease their cash-flow at a time when money is very tight. This measure will help businesses to smooth their rates payments over the next three years.”  However, retailers representatives say it may be storing up problems for next year.

Association of Convenience Stores chief executive James Lowman  said: “Business rates are the third biggest cost for convenience stores, so this eleventh hour decision will provide some relief to local shops.”  However he warned that 2010 may prove to be a difficult year for businesses paying the deferred amount.

“We remain concerned at the impending costs associated with the 2010 rate revaluation which will heap further costs on local shops, and the supplementary business rate which will give councils more powers to raise money from business rate payers,” he said.
British Chambers of Commerce head of policy Keven Hoctor said that the deferral scheme could do more harm than good.  “Staggering the cost is still an increase and it will be complex. Businesses will still be hit at a time when they have restricted cash-flow and growth,” he added.