Business rates
Business rates reliefs
Rateable values are reviewed every five years as part of a revaluation exercise. The last revaluation took place on 1 April 2010. As a result, of that revaluation the small business rate relief thresholds were increased.
In England small businesses are generally entitled to small business rate relief if they only occupy one property and the rateable value of their premises is less than £18,000 (£25,500 in London). Additional properties with rateable values below £2,600 are disregarded when considering applications for small business rate relief. However, the rateable value for such properties are included in determining whether the threshold criterion has been met. These rateable value levels for relief are for 2010-11 onwards. Lower levels (£15,000, £21,500 and £2,200) applied between April 2005 and March 2010.
In small business rate relief the amount of relief depends on the rateable value.
If the rateable value of the property is less than £6,000, the rates are calculated using the small business multiplier, which for 2010-11 is 40.7 pence, and reduced by 50 per cent.
If the rateable value is from £6,000 to £11,999, the reduction decreases on a sliding scale of 1 per cent for every £120. For example, if the rateable value is £9,000, the rates are reduced by 25 per cent.
If the rateable value is from £12,000 to £17,999 (£24,499 in London), rates are also calculated using the small business multiplier. For 2010-11, the small business multiplier is 40.7 pence (instead of the standard 41.4 pence).
Note that previously, you had to reapply for small business rate relief at the start of each valuation period. You no longer have to do this.
If you become ineligible for the relief, you must notify your billing authority.
If the rateable value of your business premises increased as a result at revaluation, your billing authority will adjust the relief accordingly.
Impact of the Budget on Small Business Rate Relief
Between 1 October 2010 and 30 September 2011, eligible ratepayers will receive small business rate relief at 100 per cent on properties up to £6,000 (rather than 50 per cent), and a tapering relief from 100 per cent to 0 per cent for properties up to £12,000 in rateable value for that period.
There are no other adjustments to the scheme and the eligibility criteria will remain the same. Your local billing authority will contact you about how this may affect you, but you should continue to pay your rates as per the bill you have received until a new bill reflecting the change is issued.
Contact your local authority if you need further advice.
Budget announcement on backdated business rates
Legislation will also be introduced to cancel backdated business rates bills for newly assessed properties split from larger rateable properties that are eligible for the eight year payment schedule.
In Wales the Assembly Government funds its own small business rates relief scheme. Find details of the small business rates relief scheme on the Welsh Assembly Government website - Opens in a new window.
In Northern Ireland, there is a hardship relief scheme for small businesses. Hardship relief provides support to businesses in crisis because of exceptional circumstances or unforeseen events that may have affected the business badly and which could not be avoided. The scheme removes the need to pay rates during that time.
Empty property
Since 1 April 2008, all empty business properties have been exempted from business rates for the first three months that they are empty. Industrial and warehouse properties qualify for a further three months' exemption from business rates. After that, full business rates are normally payable.
The period of exemption from business rates for empty properties with a rateable value of less than £15,000 was extended for one year from 1 April 2009 until 31 March 2010. The Chancellor has further extended empty property relief in 2010-11 so that all empty properties with a rateable value below £18,000 are exempted from business rates. However, outstanding rates liability incurred on or before 31 March 2009 is still payable.
Other reliefs
Charities and community amateur sports clubs can get their business rates bills reduced by 80 per cent. In some areas, this could be reduced even further.
Other non-profit organisations can apply for up to 100 per cent discretionary relief.
Certain rural businesses may be able to claim rural rate relief, eg:
- sole village shops with a rateable value below £8,500 from April 2010
- sole pubs or petrol filling stations with a rateable value of up to £12,500 from April 2010
- any other businesses with a rateable value of up to £16,500 from April 2010
To qualify for rural rate relief, the businesses must appear in the local rural settlement list for a defined settlement of less than 3,000 people.
You may be able to get hardship relief if you are finding it difficult to pay. This is normally only available to businesses that are important to the local community.
You should contact your local council for more information and to claim reliefs. Find your local council using our Contacts Directory.
Subjects covered in this guide
- Business premises
- Using your home for business purposes
- How business rates are calculated
- Paying business rates
- Business rates reliefs
- Transitional arrangements
- Checking your rateable value
- Employing a rating agent
- The appeal process
