As a small business, you may be entitled to small business rate relief in the UK.
Business rates change on non-domestic properties such as shops, warehouses, factories, offices, holiday rentals, and guest houses.
Also, the small business rate relief is handled differently in each of the UK countries.
So, if you are much interested in gathering knowledge about small business rate relief then you are on the right path.
Here, in this article, everything is related to small business rate relief in the UK.
This guide will discuss understanding small business rate relief, what is rateable value, the nature of relief, who is eligible for small business rate relief, the small business rate relief calculator, and how to apply for small business rate relief online.
let’s dive into the deep!
Understanding Small Business Rate Relief
What are Business Rates in the UK?
Business rates are a type of tax that is applied to a property when the property is used only for business purposes. It can be an office, a shop, a guest house, or anything else.
The business rates are applied to the property leaseholder or occupier. The fees of business rates are used by the local authorities for local services.
If you use a part of a building or the entire building or the premises for business purposes, you only be charged business rates for the part you are using for business purposes.
Similarly, if you run a home-based business, you need to pay the business rate for the part or section of your house that you are using for business purposes.
However, business rates are determined by your business’s property, not the profit or turnover of your business.
What is small business rate relief in the UK?
Small business rate relief is the consideration of the business rates that is charged to your business property.
Small business rate relief is applicable for some businesses if they meet certain criteria. business rate relief is different in Wales, Scotland, and Northern Ireland.
What is rateable value?
Rateable value is the value, which is granted to non-domestic premises by the valuation Office Agency.
This authority calculates the retable value based on the occupier’s annual market rent, the local councils use this data to calculate the business rate of any business.
For example, fire protection, and other types of plant and machinery, CCTV security systems may add value to a property.
These values will be evaluated and reviewed every five years. The authority will consider the usage and Size of the business property.
The Nature of Small Business Rate Relief
A business can claim for the small business rate relief if:
- The business uses only one property to run itself
- The property’s rateable value is less than 15,000 Pounds.
The amount of business rate relief depends on the rateable value of your business property.
If the rateable value of your business property is 12,000 Pounds or less and you only use one business premises, you will get 100% relief.
That means that you are not required to pay any business rates for your business property.
If your rateable value lies between 12,000 Pounds and 15,000 Pounds, the business rate will be calculated through the following formula. (15,000 Pounds – rateable value) / (15,000 Pounds -12,000 Pounds) *100%
Suppose, the rateable value of your business property is 14,000 Pounds then you will get a relief of 33.33%. Similarly, if the rateable value of your business property is 13,000, then you will receive a relief of 50%.
Conditions applied to Holiday Lets
From April 2023, holiday lets are only eligible for business rates if they meet certain conditions.
The property must be let for a holiday and it must be let for at least 70 nights in a tax year. Also, the property must be available for let holidays at least for 140 nights.
If the holiday let qualifies as a furnished holiday let for tax purposes, it will meet the business rates test. If the property does not meet the new business rates test, you need to pay the council tax instead.
If you have more than one business property
If you have more than one business property still you can be eligible for getting business rates relief. This can be the case if none of your other business properties has a rateable value over 2,899 Pounds.
Also, the total rateable value of both your business property must not exceed 20,000 Pounds. In London, this amount is 28,000 pounds.
Businesses can easily claim small business rate relief by contacting their local councils.
Who Is Eligible For Small Business Rate Relief?
If your business property has a rateable value of 15,000 Pounds or less, you can claim for small business rate relief.
To qualify for the small business rate relief, the businesses must meet the following criteria:
- The sole or main business property they occupy must have a rateable value of 15,000 Pounds or less.
- If the business occupies any additional properties to run the business, each of the additional properties must have a rateable value of less than 2,900 Pounds. Also, the sum of the rateable value of all the business properties must be less than 28,000 Pounds.
Small Business Rate Relief Calculator
I have already discussed business rates earlier in this guide. Now, I am discussing about the multiplier. You need to know the multiplier to get an accurate calculation of your business rates.
What is Multiplier?
Multipliers are the number of pence per pound of your rateable value that you need to pay in business rates. The rates of multipliers are reviewed every year by the government in line with inflation.
To support the small businesses in the UK, the business rates multipliers have been frozen at 49.9p and 51.2p in 2023-24.
Current Business Rates Multiplier values:
| Year: | Standard Multiplier | Small Business Multiplier |
|---|---|---|
| 2023 to 2024 | 51.2p | 49.9p |
| 2022 to 2023 | 51.2p | 49.9p |
| 2021 to 2022 | 51.2p | 49.9p |
| 2020 to 2021 | 51.2p | 49.9p |
| 2019 to 2020 | 51.2p | 49.9p |
To have an accurate idea of your small business rate relief, first, you need to calculate your business property’s rateable value.
It is worth knowing how to calculate your business rates yourself. it will help you ensure you are paying the right amount and help in future financial plans ahead.
- Step 1: On the website, you can search for a property’s rateable value by the postcode
- Step 2: Then, you need to find the correct multiplier from this guide for the size of your business and location
- Step 3: Multiply your rateable value by the correct multiplier
While you have the proper idea of your property rateable value then you can easily calculate the small business rate relief.
If the rateable value of your business is less than 12,000 Pounds and you are using only one property then you can get 100% business rate relief.
If the rateable value lies between 12,000 Pounds and 15,000 pounds then you can use the following formula to calculate the business rate relief.
The formula for calculating small business rate relief is (15,000 Pounds -rateable value) /(15,000 pounds-12,000 Pounds)* 100%.
If Your Small Business Do Not Qualified for Small Business Rate Relief
If you are a small business owner and you do not qualify for small business rates relief criteria, do not worry. There is another option available to you to get the small business rate relief if your business is based in England.
If your business property has a rateable value of less than 51,000 Pounds, the business rates will be calculated through the small business multiplier which is 49.9p instead of the standard multiplier, 51.2p. this is the case if you are not eligible for small business rates relief.
Small business rate relief helps you to save a large amount of money, which you can invest in some other operations of your business smooth running.
How to Apply for Small Business Rate Relief?
You need to apply for small business rate relief once, also provided that if certain defined circumstances do not change, you are not required to apply for further.
The process involved two ways of application, you can contact any local council or you can apply online yourself.
Here, at first, I will provide the steps that you need to follow to apply for the business rates relief through the local Council.
- Step 1: You can contact the local council.
- Step 2: Then, find out what the steps involved in getting small business rates relief
- Step 3: Follow the recommended steps
Online Application: To apply online, you can go to the official website www.gov.uk. Then you can provide all the required information in the application form.
Check everything very clearly to eliminate any disruption. Then click on the “submit” button. Now, you have applied for the small business rate relief.
FAQ
What is small business rate relief in England?
Ans: If your business property value lies between 12,000 Pounds and 15,000 Pounds, then the rate of business rate relief will go down gradually from 100% to 0%. For example, if your rateable value is 13,000 Pounds, you will get 50% relief on the small business rates.
What are the exemptions from business rates in the UK?
Ans: You need not pay business rates for agricultural land buildings, buildings used for training, and the welfare of disabled people, fish farms, buildings used in church halls, or public religious worship.
Who pays business rates in the UK?
Ans: The occupier of any non-domestic property is responsible for paying the business rate in the UK. You are not required to pay business rates on any empty property. Also, you are not required to pay business rates for the successive three months after your property is empty. Otherwise, most businesses must pay business rates in the UK.
Conclusion
Now you may have got a brief idea of small business rate relief in the UK. Here, I have provided almost every aspect of small business rates relief. So, you just go through my article and check whether you, as a business property occupier, are eligible for the business rate relief.
A small portion of business rate relief can make a huge impact on your financial outgoings for your business. So, you can calculate yourself if required, you can consult a financial advisor.
