Deferral scheme
The government announced recently that it will bring forward regulations which will enable businesses to defer payment of 60% of the increase in their 2009-10 business rate bills until 2010-11 and 2011-12.
Deferral scheme FAQs
- What does this mean for businesses?
- Why did the government do this?
- What is being announced?
- What do I need to do now, to defer the increase in my rates bill?
- Most of the increase in my bill is due to the end of transitional relief rather than RPI inflation. Can I defer 60% of that increase too?
- Can I start paying the reduced amount now?
- How will I know when I can claim this help?
- How do I claim this help?
- Do local authorities have to allow me to defer payment?
- Will I have to defer payment?
- When will this take effect?
- How long can I defer for?
- How much will the average business benefit?
- Will businesses be allowed to defer in future years?
- Why can I only defer a part of the increase?
- I have already paid my annual business rates. Can I have a refund?
- How will this be administered?
- What legislation is being drafted?
- Will this mean that local authorities receive less grant?
- Will this just place extra costs on local authorities?
- Will this apply in the devolved administrations?
What does this mean for businesses?
- You must keep paying your legally established liability, as set out on your current bills.
- Once the regulations are in place – which we expect to be by the end of July – we will write to you to offer you the option of deferring part of the increase (this is likely to be in the summer.)
- There's no need for you to contact anyone at this stage.
- The new bills will show the benefit of deferral, based on the total increase in your 2009/10 bill.
- For 2010/11 and 2011/12 bills, we will add the deferred amounts on.
Why did the government do this?
This will provide a smoother profile of business rates payments over the next three years. The Retail Prices Index (RPI) is widely forecast to be negative later this year, which would have a downward pressure on 2010/11 bills. This scheme offers businesses the chance to pay a lower increase in 2009/10, and make up the payments in the following two years.
Any new costs for local government associated with this change will be funded by the government. The change will not affect local authority formula grant allocations and local authorities will be able to reflect the new arrangements in their contributions to the pool.
What is being announced?
We are allowing business rate payers to defer payment of 60% of the increase in their 2009-10 rates bills until 2010-11 and 2011-12. This is to give them the flexibility to help them manage their rates bills in the current economic climate.
What do I need to do now, to defer the increase in my rates bill?
Nothing, at this stage. Billing authorities will write to all businesses offering them the option to defer payments once the necessary regulations have been made. We expect the regulations will be in place before the end of July. In the meantime, you must keep paying your business rates as normal.
Most of the increase in my bill is due to the end of transitional relief rather than RPI inflation. Can I defer 60% of that increase too?
Yes.
Can I start paying the reduced amount now?
No. Billing authorities will write to all businesses offering them the option to defer payments once the necessary regulations have been made. We expect the regulations will be in place by the end of July.
Until that time, businesses should continue to pay the scheduled amount.
How will I know when I can claim this help?
Billing authorities will write to all businesses offering them the option to defer payments, once the necessary regulations have been made. We expect that to be by the end of July.
How do I claim this help?
You just need to let your billing authority know that you would like to defer, when they write to you, offering you the option.
Do local authorities have to allow me to defer payment?
Yes. Deferral will be available on request from the rate payer.
Will I have to defer payment?
No. We are giving businesses the option of deferral to help them manage their bills – they will be able to choose whether to take up that option.
When will this take effect?
We will bring the regulations necessary into effect as soon as possible, and expect that they will be in place by the end of July.
How long can I defer for?
The deferred liability will be repaid over two years. You will pay 50% of the deferred amount in 2010-11 and the other 50% in 2011-12.
How much will the average business benefit?
A business paying a rates bill on a fairly typical property seeing a £600 rise in its 2009/10 rates liability, would be able to defer £360 of that increase to future years.
Will businesses be allowed to defer in future years?
We have no plans to allow businesses to defer their 2010/11 liability. However, as with all taxes, the position will be kept under review.
Why can I only defer a part of the increase?
We need to ensure that help is appropriately targeted. This will allow businesses to spread the 2009-10 increase over three years.
I have already paid my annual business rates. Can I have a refund?
Deferral is only available for rates that have not already been paid.
How will this be administered?
Local billing authorities are responsible for billing and collection and will therefore be responsible for administering any deferral.
What legislation is being drafted?
We will bring forward regulations under the Local Government Finance Act 1988.
Will this mean that local authorities receive less grant?
No. We will ensure that grant allocations remain unaffected by this help.
Will this just place extra costs on local authorities?
No. Any new costs for local authorities will be considered a new burden and will be funded by central Government, using the same mechanism as for the recent mailshot to business rate payers about the 2010 revaluation.
Will this apply in the devolved administrations?
That is a matter for the relevant devolved administration.
