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GOVERNMENT ANNOUNCES HELP FOR BUSINESS RATEPAYERS (ENGLAND)

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Limits will be set on increases in business rates next year, with ...
Limits will be set on increases in business rates next year, with

additional help for small companies, the government announced today.

Announcing that business ratepayers in England would benefit from a

transitional relief scheme as part of the 2000 revaluation, local

government minister Hilary Armstrong said:

'Today I have issued a consultation paper which seeks views from

businesses on options for transitional relief. Under revaluation,

which takes place by law every five years, many ratepayers will see

their bills fall, but the minority of ratepayers facing significant

increases will need time to adjust.

'This means that we will therefore set limits on the amount anyone's

bill can increase in each year. As on previous occasions there will

also have to be limits on the annual decreases in the bills of those

whose bills fall significantly after the revaluation in order to help

fund the limits on bill increases. We recognise that there may also

need to be a modest exchequer contribution towards the cost of a

transitional relief scheme, particularly in the first year after

revaluation.'

The law requires that revaluations must be carried out

every five years, to ensure that non-domestic rates are fairly

distributed between businesses across England, to reflect relative

changes in the property market. The total amount collected remains

broadly constant in real terms. As a result, some rate bills will go

down, while others will go up.

This is the third such revaluation since the national non-domestic

rate was introduced in 1990.

As a means of helping small businesses, we propose that there should

be tighter limits on increases in the bills of small properties than

on those for large properties. We also propose that more generous

reductions should be allowed to small properties benefiting from the

revaluation.

Details of the final transitional relief scheme will be announced in

November, in the light of comments received in response to the

consultation.

NOTES

1. Five yearly revaluations of the 1.6 million non-domestic

properties in England are required under the Local Government Finance

Act 1988. Their purpose is to re-distribute the rate burden in line

with movements in the open market rental values of property. They

keep the total amount of rates paid in England broadly constant in

real terms. The next revaluation takes effect on 1 April 2000, based

on rental values as at 1 April 1998. The revaluation will not affect

the council tax.

2. The full details of the effects of the revaluation will not be

available until the end of this year. But it is likely that there

will be an increase in the total rateable value for England of around

20% - reflecting the overall improvement in the economy since the

last revaluation in 1995. In order to ensure that the revaluation

keeps the total amount of rates paid in England broadly constant in

real terms, the National Rate Multiplier (poundage) for England will

have to be reduced. A provisional calculation of the Multiplier for

2000/01 will be announced in November.

3. Copies of the consultation paper are available from Edward

Stanislas (Zone 5/J1, Eland House, tel 0171 890 4216, e-mail:

edward_stanislas@detr.gsi.gov.uk.

4. The closing date for comments is 4 November.

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