5% business rate rise stay of execution, but SMEs still suffer

In a sudden change of heart, chancellor Alistair Darling, has scaled back the 5% business rate rises which were due to come into force today, but the resulting mess is still a pain for UK small businesses.

The new proposals announced last night mean that businesses will only pay a 2% increase in business rates this year, spreading the remaining 3% from 2010 to 2012.

The move was broadly welcomed by business groups. Richard Lambert, CBI director general, said:

We welcome the announcement, but have been campaigning for a two-year freeze on business rates, instead of the 5 per cent rise that is still being applied over time.

The problem for many small businesses, however, is now an administrative one.  Rather than receiving the cash flow benefit of a deferred increase automatically, they will have to apply to their local authorities for that deferral.

Quite apart from the unnecessary administrative burden on businesses themselves, it also adds one more piece of red tape to be handled by local authority bureaucrats at a time when local and national government, like businesses, should be counting every penny.

[Picture credit: London Summit licenced from Flickr]