Alistair Darling, the Chancellor of the Exchequer announced Tuesday that UK's business rates will rise only 2% from April 1, and the remaining 3% would be spread over the coming two years. The rates were due to go up by 5% from today. Last minute, the government gave more time to pay business rates.

Business ratepayers will be able to defer around GBP 600 million across 1.6 million properties, boosting their cash flow for the current year.

Darling said, The Government recognizes that businesses need help now to ease their cash flow at a time when money is very tight. I believe this will provide real and genuine help for businesses in this country.

Under existing legislation, business rates are adjusted every April in line with the Retail Prices Index for the previous September. The HM Treasury said the new measures are intended to smoothen the effects of the spike in inflation of 5% in September. But RPI inflation had fallen to zero last month and is expected to fall further.

CBI's Director-General, Richard Lambert said, Although this change will not reduce the tax burden on companies, it will allow them to pay the 5% increase over three years instead of one. This is a step in the right direction, helping companies at a critical time by improving cash flow.

According to Secretary of State for Communities and Local Government, Hazel Blears, the steps will provide them with real help now, by giving them the flexibility to defer part of this year's increase in business rates, and manage the financial pressures that they are facing.

The Director General of British Retail Consortium, Stephen Robertson welcomed government announcement. But Robertson said retailers' burden has been increased by GBP 100 million from April 1 and there will be no change to the overall GBP 1.6 billion increase in business rates bills retailers' face by 2010/11.

BRC urged the Government to reintroduce empty property rates relief and remove the serious threats that remain from the impact of 2010 revaluation and Business Rates Supplements.

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