SMALL firms in Herefordshire and Worcestershire could face ruin as business rates are reviewed this year.

All business premises are to be re-valued in 2005, and the Government is expected to put up rates as a result.

Christopher Harvey, head of policy and representation at the Chamber of Commerce, Herefordshire and Worcestershire, said the double whammy could spell disaster.

"Re-valuations are done periodically, and since the last one the property market has moved on a lot," he said.

"Rateable values are going to be much bigger than they are at present and depending on what the Government sets the business rate at, this could mean businesses are paying double or more the rates they are now.

"For a number of our small business members, who are already teetering on the edge, this could push them off."

At present, small firms can benefit from Rates Relief, which entitles them to up to 50 per cent off.

But it is expected that once the revaluation is done, many will go over the "ceiling" set for this.

Amend rate relief

The local branch of the Federation of Small Businesses has urged the Government to amend the small business rates relief in line with the new figures when they come out.

"Small firms feel the pinch of business rates more sharply than larger firms," said Angela Smith, spokesperson for the local FSB.

"For a business with a turnover of £50,000, business rates represent 7.7 per cent of sales, but for those with a turnover of £500,000 it is just 1.4 per cent.

"The 2005 business rates re-valuation looks set to compound the problem. The widespread increases in rateable values will not only spell increased rates for many small businesses but will also drag many firms out of the threshold for Small Business Rates Relief.

"Business rates are often the second or third highest outgoing small firms face. Rates can be the difference between success and failure.

"The Government must act now to right this disparity and support small business. It should extend small business rates relief to all business premises with a rateable value of less than £25,000."