Property firm issues rates bills warning

Small businesses should not bank on the Government's claims that 60% of firms will see their rates bills drop next year, warns property consultant Gerald Eve.

Jerry Schurder, head of rating at Gerald Eve, said unfair and over-complex transitional arrangements will force many firms, which are expecting falls in their rates bills, to pay up to 50% more than their true rates liability in 2005.

This is because the Government wants to level out big rises or drops in business rate bills through a system of transitional relief, which phases in large changes in payments.

Schurder described it as "morally indefensible" and "quite absurd" that businesses, whose rates bills should be falling, had to pay a financial penalty to protect other businesses - usually more successful companies - from increases in their bills.

The Government also announced changes to the small business rates scheme, which comes into effect in April next year. The threshold, up to which small businesses can claim relief on 50% of their bills, has been raised from £8,000 to £10,000. Schurder claimed that this scheme would save small businesses little more than £3.79 a week. He pointed out that businesses with a rateable value above £15,000 would have to find an extra 1.6% on their bills to pay for the new relief scheme for smaller businesses below the £10,000 rateable threshold. Bizarrely, he added, companies with a rateable value between £10,000 and £15,000 had to apply to their local authorities to avoid the surcharge.

Schurder concluded that the Government had missed its opportunity to simplify the system and made it impossible for firms to plan ahead for their 2005 rate bills.

The Valuation Office Agency will publish the revaluation figures in October, while the Government will launch a consultation next month on the transitional arrangements, which will not be finalised until December.