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Help for businesses
06/04/2009
Businesses in Scotland will be able to spread this year's annual increase in business rates over three years to help companies' cash flow and provide a 'much-needed boost' for the Scottish economy.
Finance Secretary John Swinney said that, following an agreement with local government, the move would provide vital additional support for businesses across Scotland.
Business rates are adjusted every April normally in line with the rate of inflation (specifically the Retail Prices Index) in the previous September. As a result, the increase for 2009-10 is five per cent.
Mr Swinney said tha the measures are designed to limit the impact of this increase and will ensure Scottish businesses continue to benefit from more generous rates relief than their counterparts in England. Businesses can choose, if they want, to spread part of the increase over a longer period. The breathing space that gives them will free up some much needed cash this year to help meet the pressures of the current economic downturn.
Local authority budgets this year and in the next two years will be unaffected by today's announcement. The Scottish Government is working closely with the Convention of Scottish Local Authorities and with councils to ensure the new arrangements can be implemented as smoothly and as quickly as possible.
Mr Swinney said:
"The Scottish Government is already delivering vital help for small businesses in the form of the small business bonus scheme.
"That scheme will save the average small business around £1,400 on their rates this year. Many thousands of small businesses will pay nothing at all.
"For those businesses that still have to pay rates, we are acting today to offer them vital breathing space in these tough economic times.
"Spreading the cost will improve cash flows this year and so help businesses through the current economic challenges so that they can be better placed to take advantage of the upturn when conditions begin to improve.
"We will work closely with local authorities to deliver this change. Local authority budgets will not be affected.
"This work builds on the comprehensive range of actions we are already taking through our economic recovery plan.
"It demonstrates our continued commitment to do all that we can to helping businesses and households the length and breadth of Scotland through the downturn."
In response to the current economic situation and the impact of the 5 per cent increase in business rates from 1 April 2009, ratepayers will be allowed to defer up to 60 per cent of the annual increase in their 2009-10 bills until 2010-11 and 2011-12.
Under the proposals, local authorities will be able to offer businesses the option to defer a proportion of the increase in their rates bill.
This means that all ratepayers will have the option of spreading part of their 2009-10 increase over three years. The amount to be spread will be based upon on the total annual increase in a ratepayer's bill in 2009-10.
The new arrangements for deferring 2009-10 liability will not be compulsory for rate payers. Those who prefer to do so will be able to pay off all their 2009-10 liability within the current financial year if they wish.
The additional costs which local authorities will incur as a result of this measure will be refunded to them by the Scottish Government.
Under Scottish legislation, the deferral arrangements will be introduced more quickly than in England where legislation is not expected to be brought forward for several months.