The government has thrown another lifeline to struggling businesses by allowing them to spread payment of 2009-2010’s inflation business rate hike over three years.

Business rates are adjusted each April in line with the Retail Prices Index (RPI) for the previous September. Inflation in September 2008 stood at five per cent and businesses feared the resulting rise in business rates would have had a serious impact on cash flow. RPI inflation has now fallen to 0 per cent.

Government measures announced on 31 March 2009 mean that around £600 million in business rates on 1.6 million properties can be deferred over the next three years. Businesses to benefit include those affected by the end of the 2005 transitional relief scheme to spread payment of the increase in bills over a three-year period.

The move builds on the help given to businesses struggling to pay corporation tax, national insurance and VAT on time by HM Revenue & Customs’ Business Payment Support Service (BPSS). Since its launch in November 2008, it has helped 101,135 businesses to make affordable arrangements to pay £1.78 billion in tax.

Announcing the move, Chancellor of the Exchequer Alistair Darling said: "The government recognises that businesses need help now to ease their cash flow at a time when money is very tight.

“This measure will help businesses to smooth their rates payments over the next few years to deal with the effects of the recent spike in inflation."