Planned government reforms will see a reduction in business rates for many smaller firms.

Under the measures, which are contained in the soon to be published Localism Bill, the small business rate (SBR) is to be applied automatically to all qualifying premises in England.

Since the existing single premise requirement is to be axed, the move should help firms with multiple premises, provided they have a rateable value of less than £18,000 each.

As a result, businesses will automatically receive a relief of 0.7 pence against the uniform business rate of 41.4 pence. Up to half a million businesses could benefit from the change.

However, firms will still need to apply for small business rates relief, which applies to premises with a rateable value of less than £12,000 and for those with premises of rates below £6,000 means a 100 per cent relief.

A spokesman for the Department for Communities and Local Government said the extension of the SBR would not require larger companies to pay more rates as they are "unclaimed reliefs".

John Walker, the national chairman of the Federation of Small Businesses, said: "After rent and wages, rates are the biggest cost to many businesses and steps to help small firms automatically get the relief they are entitled to is welcome news. We have long been calling for small business rate relief to be made automatic and this cash injection will be of great help to many small businesses.

"The onus is now on councils to be creative and not needlessly make small businesses go through an application process when it is obvious they are eligible. We have developed excellent relations with councils across the country through our small business engagement accord and we will be urging them to use their new powers to ensure that all small businesses receive the relief that they are entitled to."

The Localism Bill will allow local authorities to set self-funded local discounts to rates bills as part of their efforts to stimulate business growth.

Business communities are also to be given a vote on all supplementary business rate proposals made by local councils. Previous rules meant that councils only had to invite businesses to vote on a project where they were being asked to fund more than a third of the costs.

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