Small Business Rates Relief Guide

small business rates relief
Here's a quick guide to help you get to grips with small business rates relief in the UK.

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Whether you’re setting up a business, or planning to grow your business, this is essential reading!

In the UK, many businesses are subject to business rates, and some businesses are entities to small business rates relief. These are charged on non-domestic properties as a form of tax.

Here’s the different types of small business rates relief you can apply for, that we’ll explain in this guide:

Business rates typically apply to shops, offices, warehouses, pubs, factories, guest houses, and holiday rental homes.

This applies if you own the building, or you simply use part of a building for non-domestic purposes.

Business rates are usually calculated based on the “rateable value” of the property. The valuation is provided by the VOA – Valuation Office Agency.

There are many circumstances where you can gain business rates relief and it is important to understand the situations that rates relief are applicable.

How to Apply for Small Business Rates Relief

Your local council is responsible for business rates.

They are also responsible for calculating rates relief and giving any help or advice in this matter.

Therefore, if you feel you are entitled to business rates relief, the first port of call is to contact your local council – the local council where your business property is located, not where you live (they may be the same).

For additional advice, there are several services that can help including:

  • RICS (Royal Institution of Chartered Surveyors)
  • IRRV (Institute of Revenues, Rating, and Valuation)
  • RSA (Rating Surveyors Association)

Small Business Rates Relief

For small businesses, paying business rates can make a huge difference in your cash flow and ability to make a profit.

However, it is possible to get small business rates relief. The following criteria applies for eligibility:

  • The property has a rateable value of less than £15000.
  • The business only uses one property.

If the above condition are met, there are two different levels of relief:

  • If the property has a rateable value of £12000 or less, you get a 100% rate reduction.
  • If the property has a rateable value of £12001 to £15000, you get a percentage rate reduction based on the value between 100% to 0%.

It should also be noted that even if your small business has a rateable value greater than £15000, your business rates are calculated using the small business multiplier.

This means that regardless, you will pay less than the standard business rate.

Rural Rate Relief

Businesses operating in rural areas can also be privy to rate reliefs. A rural area in the UK is defined as a settlement with a population of 3000 or less.

For rural rate relief, one of the following conditions must apply:

  • Your business is within an eligible rural area.
  • It is the only post office or village shop with a rateable value of £8500 or less.
  • It is the only petrol station or public house with a rateable value of £12500 or less.

If these conditions are met and your business is eligible, you are privy to a 100% rate relief reduction.

Charitable Rate Relief

There is a range of differing rate reliefs for charities, and community amateur sports clubs. The standard rate relief is up to 80%, providing that the property is used for charitable causes.

In addition to this standard 80%, it is possible to contact your local council to apply for a full 100% relief. This is known as a discretionary relief.

Charities can apply for this, and non-profit or voluntary organizations can also apply with the local council.

Enterprise Zones

Throughout the UK you can find “Enterprise Zones”.

These zones were introduced as part of a wider government strategy which aimed to support local businesses and improve industry. There are currently 48 enterprise zones spread throughout the UK.

If your business is located within an enterprise zone, you could qualify for business rates relief. The local council that the zone applies to will calculate the relief.

However, you could get relief up to £55,000 per year, for five years.

Exempted Buildings and Empty Buildings Relief

Aside from circumstantial reliefs, some buildings are simply exempt from any type of business rates. These include:

  • Farmland and farm buildings.
  • Fish farms.
  • Buildings used for the training and welfare of the disabled.
  • Buildings registered for religious worship, or attached church halls.

It should be noted that the above exemptions have a strict legal framework and it is advisable to check with the Valuation Office Agency Service beforehand.

If your business property is empty, you also do not have to pay rates for the first three months. After this initial 3 month period, full rates generally apply.

If your property is empty, you should contact the local council to inform them so that the rates can be removed for the first three months.

Hardship Relief

In England only, there is such a thing as hardship relief. This is a situational form of relief and there is no set rule for it.

The general premise is that local councils can choose to give hardship relief if they feel the business has a valid case such as:

  • Your business would be in financial trouble without it and at risk of closure.
  • Hardship relief would benefit the local community.

Essentially, this is a form of relief that is used to support local businesses within a community. If you are in such a situation, you would have to contact the local council and plead your case.

Retail Discount

Retail businesses with physical properties are privy to business rates relief.

The government does this to promote high street business and to help stimulate local economies.

The following types of retail businesses can apply for rates relief:

  • A shop.
  • A cafe, restaurant, bar, or pub.
  • A cinema.
  • Music venues.
  • Hospitality or leisure business (Gyms, spas, casinos, hotels etc.)

Eligible businesses get the following rates relief:

  • 100% rate relief from April 1 2021 to June 30 2021.
  • 66% rate relief for the remainder of the 2021 to 2022 financial year.

It should also be noted that this retail relief is ADDITIONAL to any other business rates you may be privy too.

Nurseries Discount

Certain nurseries are eligible for business rates relief too.

However, the business must meet the following criteria:

  • The nursery is on the Ofsted’s Early Years Register.
  • The property is mainly used to provide Early Years Foundation Stage education.

If so, the rates relief are as follows:

  • 100% rate relief from April 1 2021 to June 30 2021.
  • 66% rate relief for the remainder of the 2021 to 2022 financial year.

We hope you have found this guide beneficial.

As you can see, there are a number of ways you may be able to claim small business rates relief. Ensure that you understand your rights fully, and if you think any of the above apply to your business – contact your local council.

For full information, you can check the government overview for business rates relief.

For Government support on going digital, check out the latest on the Help To Grow Digital Scheme starting in summer 2021.

You may also want to check out these guides to starting an online business, complying with data protection laws, and cyber security for small business.

If this guide to small business rates relief helped you, please recommend DigitalSupermarket.

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