The Government has announced that it will introduce regulations allowing businesses in England to defer payment of 60% of the increase in their 2009-10 business rates bills.

The deferred amounts will be added to bills for 2010-11 and 2011-12.

The aim of the new regulations is to smooth the effects of the spike in inflation in September 2008.

Non-domestic rates are calculated by multiplying the rateable value of a property by a factor known as the multiplier.

Under Schedule 7 to the Local Government Finance Act 1988, the multiplier is increased each year in line with the annual change in the retail prices index (RPI) from the previous September.

In September 2008, RPI inflation reached 5 percent. It has since fallen to 0 percent and is expected to turn negative at the end of 2009.

Billing authorities will write to business rate payers once the regulations have been made, offering them the option to defer payments.

The Government expects the regulations to be in place before the end of July 2009.