Small Firms In England Missing Out On GBP400 Million In Tax Breaks

by Jason Gorringe, Tax-News.com, London

09 June 2006

Half of the small businesses across England are missing out on tax breaks that could make the difference between staying afloat and going bankrupt, a new survey by the Local Government Association has concluded.

A snapshot survey of local councils has revealed that under half of all businesses that could qualify for Small Business Rate Relief, and cut their bills by up to GBP2,500, have failed to apply for it.

Small Business Rate Relief came into effect on April 1, 2005. Eligible businesses with rateable values of below GBP5,000 will get 50% rate relief on their liability. This relief will decrease on a sliding scale by an estimated 1% for every GBP100 of rateable value over GBP5,000, up to GBP10,000.

The relief is available to ratepayers with one property (or one main property and other additional properties), providing the additional properties do not have individual rateable values of more than GBP2,200, and the combined rateable value of all the properties is under GBP15,000 (or GBP21,500 in London).

The survey, which had thirty five responses from Local Authorities, found that of the 78,770 small businesses that could be eligible for Small Business Rate Relief, just 38,292, or less than half, had applied for it. If this was replicated across the country, there would be around 873,221 small businesses entitled to claim the relief, with only 424,494 so far having done so, meaning that about GBP400 million in tax breaks is going unclaimed.

Council leaders have urged businesses across the country to come forward and claim the money they are entitled to. Most recent figures show that there were 3,439 company liquidations, a rise of 17.6% on the previous year, in the first quarter of 2006 in England and Wales.

“Small businesses up and down the country are facing immense difficulties keeping their heads above water. Hundreds of millions of pounds is sitting around waiting to be claimed by hard pressed bosses of small firms," observed Sir Sandy Bruce-Lockhart, Chairman of the Local Government Association.

"When local businesses are facing rising costs, it is vital that they apply for the tax relief that they are entitled to. Many thousands of businesses are entitled to a tax rebate that could make the difference between business as usual and bust," he added.

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