In the Autumn Statement, Chancellor George Osborne pledged to keep the Small Business Rate Relief scheme going for another year – which he said would help 600,000 businesses.
The tax break means companies with property worth less than £6,000 are exempt from business rates, with a reduced rate payable for those with property worth less than £12,000.
Osborne said: ‘We understand there is no growth and no jobs without a vibrant private sector and successful entrepreneurs. So this spending review delivers what businesses need.’
But Jim Duffy, chief executive of start-up programme Entrepreneurial Spark, said while he was pleased with the decision, it did not go far enough.
He said: ‘The small business rate relief scheme being extended for another year is good news for start-ups, but I’d like to see the Chancellor go deeper and provide more tax breaks and support for entrepreneurs.
‘We’d like to see more initiatives to help start-ups recruit, plus easier access to funding for high potential businesses.’
By the end of this parliament in 2015, councils will be given control over business rates as part of the government’s promise to share powers with other parts of the UK via its so-called ‘devolution revolution’.
Local authorities will receive all of the income generated from business rates. The move will give them control of £13billion of additional local tax revenues, and £26billion in total business rate revenues.
The uniform business rate will be abolished and instead councils will be able to cut rates if they need to boost growth in the area, or raise them by up to 2 per cent, provided the proceeds are spent on local infrastructure.
Mark Sismey-Durrant, chief executive officer at Hampshire Trust Bank, said the move placed greater responsibility on councils to look after small businesses.
‘The new power handed to councils enabling them to set local business rates should boost regional economic prosperity, as councils will now have responsibility for creating thriving local environments for growth.
‘However, with greater power comes greater responsibility. Any potential business rate rises need to be carefully considered in how these could impact the thousands of SMEs which operate across the country.
‘The UK’s smallest businesses need less red tape in order to grow and prosper and therefore we hope to see local councils look to support smaller businesses when making future decisions on business rates.’
Local growth fund
Building on the creation of the ‘Northern powerhouse’, Osborne said his aim was to ‘spread economic power and wealth across our nation,’ by putting aside £12billion for a ‘local growth fund’.
The government will create 26 new or extended ‘enterprise zones’, including 15 zones in towns and rural areas that will receive additional funding and support for enterprise schemes.
Meanwhile, the Department for Business, Innovation and Skills budget is being cut by 17 per cent overall, partly funded by Innovate UK’s funding being switched from grants to loans.
Overall, John Allan, national chairman for the Federation of Small Businesses, said Osborne had done well within the parameters available to him.
‘Given the tight constraints that the Chancellor was working to, small businesses will be pleased that he has listened to their concerns.
‘Mr Osborne has managed to fund areas that drive productivity and long-term economic growth, such as skills and our science and innovation base.
‘He has also committed to funding critical infrastructure projects which are key to successfully rebalancing growth across the country.
‘And importantly, small firms will be relieved by the extension of small business rates relief for another year, pending the full reform due in 2017.’
