Government rejects automatic small-firm rate relief

The Government has dismissed calls for small-business rate relief to be granted automatically for English firms.

A powerful alliance of trade groups, council bosses and an influential MP support the move to help struggling small companies, including pubs.

Under the scheme, firms at premises with a rateable value of up to £15,000 can claim rate relief of up to 50% from councils.

Businesses in Wales get relief automatically, but in England firms must apply. The Local Government Association (LGA) said £400m of rate relief was unclaimed in 2006 and the scheme can save businesses up to £2,500 a year.

Peter Luff MP, chairman of the Business & Enterprise Committee, is working with the Federation of Small Businesses (FSB) to table a private members' bill urging relief to be automatic.

A report from the LGA and the British Chamber of Commerce also calls for the move.

But a Department for Communities & Local Government spokeswoman said it is "not possible" to apply relief automatically: "Not all small properties are occupied by small businesses, and a business may not qualify for relief if it occupies more than one property."

FSB national chairman John Wright said: "The Government ought to make small business rate relief automatic as it would save small businesses up to £2,500 a year and help those struggling with reduced cash flow.

"The Government should look at a system similar to that practised in Wales where it is automatically applied. While it is true that some big companies own small properties, if rate forms are sent to the billing address of a business, the owner would then fill in the combined rateable value of their properties. If this comes below the threshold then they would be automatically applicable for the relief."