Mayor exempts 4,000 businesses from Crossrail business levy

Up to four thousand of London’s smaller businesses will be exempt from the two pence business levy to fund Crossrail, while those areas of the capital set to benefit most from the new rail link will pay a greater share, the Mayor of London announced today.

Whilst over 80 per cent of London’s businesses will pay no supplement at all, rising to almost 90 per cent across the outer boroughs, the capital’s most important new infrastructure project for a generation is essential to deliver a 10 per cent increase in rail capacity. Crossrail will immediately relieve congestion on the network which is expected to increase substantially as London’s population grows over the next two decades.

Therefore the Mayor has today confirmed that the Crossrail Business Rate Supplement (BRS), is to be set at the proposed rate of two pence and is payable from April 2010. The overall Crossrail funding package, of which this forms part, has been supported by the majority of the key business representative bodies in the capital. However, following consultation with London’s businesses, he has raised the threshold at which the BRS must be paid.

It was initially proposed that businesses with a rateable value of over £50,000 would pay the supplement but the Mayor has increased this to over £55,000. This will particularly help London’s small and medium sized firms who represented the majority of the respondents to our initial proposals. Up to 4,000 smaller properties will be exempt from the levy as a result of the change.

The BRS will finance £4.1 billion of the Crossrail project costs. The supplement is expected to continue for between 24-31 years to fund the interest on and repayment of the debt the GLA will take out to finance this.  Seventy per cent of the cost will be raised in boroughs which will have a new Crossrail station, so businesses in those areas will therefore pay the largest BRS contributions overall.

Half the cost in the first five years will be met by business ratepayers in Westminster, the City and Canary Wharf. Those in Westminster are estimated to contribute £67 million towards the £219 million expected to be raised annually by the supplement in 2010-11, compared with the projected £60 million that businesses in all 20 outer London boroughs combined are likely to pay. Every London borough is expected to benefit by at least £14 million a year by 2026

The higher threshold will also benefit schools and other not for profit organisations. In Barking and Dagenham, for example, almost one quarter of the properties being made exempt from the BRS by the change are either primary schools, nurseries or children’s centres.

The Mayor of London Boris Johnson said:

‘When Crossrail is completed in around seven years, London will be the best connected city in the world where people will be able to criss-cross the capital at speed and in comfort. This major new addition to the network will deliver huge benefits by supporting business, creating new long-term jobs and making the whole city an even more attractive prospect for overseas investors.

‘However, I understand that in these difficult times the additional business rate will be a greater burden to our smaller businesses, which are the backbone of London’s economy. Our final proposals now set the right balance by exempting a further 4,000 of those firms that initially faced a disproportionate burden to those larger organisations in the centre, the West End and the financial districts that will benefit significantly from Crossrail and should therefore pay the greatest share of the construction costs.’