Rate holiday extension will help firms to survive

In his Budget speech, Mr Osborne said that the retail sector included many small shop keepers who were anxious about the impact of business rate rises.

He added: “The last Government planned that the current rate relief holiday for small businesses should end in October this year.

“I don’t think that would be right.

“So I can announce that, at a cost to the Exchequer of £370m, I will extend the rate holiday for small businesses for another year – to October 2012.”

Margaret Wood, the regional chairman of the Institute of Directors in Yorkshire and the Humber, said: “I welcome the extension of the business rate relief holiday for small firms and hope that this will act as a lifeline for those businesses who have been hardest hit by the economic downturn.”

Luigi Falivene, an associate in law firm DLA Piper, said that, as a result of Mr Osborne’s announcement, businesses in premises with a rateable value of less than £12,000 would either pay discounted or no business rates until October 2012. He said this would create a sizeable direct cost saving for businesses in difficult times.

Mr Falivene added: “This will undoubtedly have a positive impact on small businesses across the country and will be one of the more welcome elements of Mr Osborne’s budget.”