Mayor exempts 4,000 firms from Crossrail levy

The initial proposal stated that businesses with a rateable value of over £50,000 would be required to pay two per cent of this value per year from April this year. This has now risen to £55,000, exempting a further 4,000 businesses from the levy.

The Business Rate Supplement is designed to raise £4.1billion towards the cost of Crossrail, but the Mayor announced that Canary Wharf, Westminster and The City would pay half of the cost for the first five years, and that 70 per cent of the cost would fall on boroughs with a station.

Under the new proposals, Tower Hamlets is in line to pay £11.6million in BRS in 2010/11, 5.2 per cent of the London total. Greenwich will pay £1.8million or 0.8 per cent, while Newham will pay £2.9million or 1.3 per cent.

Significant ratepayers include 12 per cent or £26.5million from the City of London, £66.6million or 30.1 per cent from Westminster and £16.5million or 7.5 per cent from Camden.

Mayor Johnson said that the move balanced the "huge benefits" of Crossrail with the "greater burden" it would put on smaller businesses "in these difficult times".

He said: "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."

The £4.1billion target for the BRS consists of two elements. The GLA will be borrowing £3.5billion over the next five years - including £800million in 2010/11 - to finance its contribution to the project. The BRS will finance the interest until the expected end of construction in 2018, with repayments on the loan scheduled to begin once the work is over. With annual payments by businesses, the Mayor's office believes the debt should be "fully repaid in 2037-38".

BRS income will also be used to finance £600million in direct construction costs, using the money not required to pay off interest costs. Just under 17 per cent of London businesses are estimated to be liable for the BRS, with that percentage dropping in outer London.

Ratepayers such as charities and amateur sports clubs could receive at least 80 per cent relief on these bills, but empty properties are not exempt. The BRS is expected to raise £218.5million a year with the new threshold.

Colin Stanbridge, chief executive of the London Chamber of Commerce and Industry, said: "Crossrail is vital to the future success of the capital but it is important London's smaller companies are not subject to unnecessary or excessive financial burdens just as we are emerging from the recession.

"This is a good deal for London's businesses and we applaud the Mayor for this bold decision which takes into consideration both current economic conditions and the significant rise in rates that London firms will see this year."