Businesses using only one property, with a rateable value of £6,000 or less, currently pay nothing whatsoever in business rates – but were set to lose half their rate relief as the measure expired at the start of the 2013-14 tax year.
The new measures keep an estimated 350,000 firms out of business rates altogether, at a cost of roughly £425m to tax revenue, and benefited all firms with properties rated at £12,000 or below – of which there are around half a million – as the rate tapers off to the full 45.8p in the pound paid above the £12,000 upper limit.
But British Retail Consortium boss Stephen Robertson slammed the chancellor for failing to keep a tighter hold on rates for all businesses.
“Business rates rose dramatically in both 2011 (4.6 per cent) and 2012 (5.6 per cent), adding more than half a billion pounds to retailers’ rates bills,” Robertson said. “Shop vacancy numbers and retail employment are already being hit.”
Meanwhile, the government also confirmed that cash accounting for small, unincorporated businesses will be rolled out from April 2013.
The Chartered Institute of Taxation welcomed the signal towards cash accounting for small firms, but warned the system must be simpler than HMRC proposed, in order to “reduce burdens and compliance costs for those businesses.”