Ministers face anger over extra £1bn in revenue after business rates revamp

Ministers are facing a backlash from firms after official figures suggested the Treasury could take in an extra £1 billion in business rates.

The Government has said a controversial revaluation of business rates, due to come into force in April, is revenue neutral.

But figures released by the Department for Communities and Local Government show the Treasury is expecting to take in £25.5 billion in the year 2017/18, up from £24.5 billion the year before.

The analysis says appeals could reduce the amount gained by £1.3 billion compared with £600,000 in the past year, but that revenues could still rise by £300,000.

The Government said the predicted extra revenue is the result of growth and new properties coming into the system, and not due to existing business rate payers being charged more.

But it comes as business leaders have urged ministers to reconsider the pending shake-up to business rates amid warnings that it could lead to firms closing and staff laid off.

Mike Cherry, chairman of the Federation of Small Businesses (FSB), said: "At Budget 2016 the Government announced the biggest ever cut in business rates worth £6.7 billion over the next five years.

"This would reduce business rates with a real focus on the UK's smaller businesses. Ministers must honour this commitment, made to FSB members and the wider UK small business community.

"The business rates system is increasingly unfair and outdated, with many facing arbitrary surprise hikes in their bills.

"It would add salt to the wound if ministers now do not deliver what they promised."

But the Government said the majority of firms would be unaffected by the changes, or see their business rates decrease.

David Gauke, Chief Secretary to the Treasury, said: "Far from the picture painted by scaremongering ratings agents, nearly three-quarters of businesses will actually see no change, or even a fall, in their business rates bills.

"The fact is that the generous reliefs we are introducing mean that 600,000 small businesses are paying no business rates at all - something we're making permanent so they never pay these bills again.

"Whether on a town's high street or in a rural community, we've also introduced £3.6 billion in support for companies affected by the business rates revaluation - a process that is making the system accurate and fair for everyone."