Finance & Legal

Small Business Rate Relief: What You Need to Know

You may not know this, but some businesses are eligible for discounts on their business rates through a helpful government scheme called Small Business Rate Relief.

To help you understand the scheme better and find out if you’re eligible to receive it, we’ve broken down everything you need to know into a handy step-by-step guide…

1. What Are Business Rates?

First thing’s first, let’s talk through the nitty gritty. Business rates are the tax you pay on properties you use for your business. Councils send out a business rate bill every year, usually around February/March time. The amount you owe for this depends on the rateable value of the property, also known as the annual market rent value, which varies based on the size of the property and its usage.

2. What Is Small Business Rate Relief?

Small Business Rate Relief cuts the amount of rates you have to pay depending on the rateable value of your property. It is provided by your local council and is designed to help take the pressure off when it comes to paying bills.

3. Why Is It Good For Small Businesses?

The great thing about being able to save on your rates is that it allows you to invest into other parts of your business that may need additional funding, such as marketing, which is critical to growth.

4. Am I Eligible?

You’re only eligible to receive Small Business Rate Relief if:
• Your business works from one property
• Your property’s rateable value is less than £12,000

5. What Do I Get?

If your property has a rateable value of £6,000 or less, you won’t have to pay any rates until April 1st 2017. This is double the usual relief of 50% off rates.

For properties with a rateable value between £6,001 and £12,000, the rate relief goes down gradually from 100% to 0%. For example, if your rateable value is £10,500, you’ll get 25% off your bill. If the rateable value is £9,000, you’ll get 50% off your bill.

6. What if I Use More Than One Property?

You can still receive Small Business Rate Relief on two properties (including any car parking spaces) if the rateable value of each of property is less than £2,600. When this is the case, the rateable values are added together and relief is then applied to the property with the highest rateable value.

If you start working from a second property within the tax year, then you’ll continue to receive your existing relief for one year.

7. What if I Don’t Qualify For Relief?

If your property has a rateable value below £18,000 or £25,500 in Greater London, you’re considered a small business. This means that even if you aren’t eligible for Small Business Rate Relief, your rates will still be calculated using the small business multiplier (which tells you the percentage of the rateable value you pay in business rates) at opposed to the standard multiplier, thereby giving you slightly better rates.

8. Even More Great News

The Government recently announced that from 1 April 2017, Small Business Rate Relief will be permanently reduced from 50% to 100% for properties with a rateable value between £6,000 and £12,000! This means that businesses with a property within this threshold won’t have to pay any rates at all, saving up to £5,900 per tax year!

Tapered relief will then be offered to businesses with properties that have a rateable value between £12,000 and £15,000. The threshold for use of the small business multiplier will also increase from a rateable value of £18,000 (£25,000 in Greater London) to £51,000. This means that over 250,000 businesses, including some high-street shops, will be exempt from paying the higher rates.

9. Additional Rate Relief

Some local councils give extra discounts on top of Small Business Rate Relief. These include the following:

• Hardship Relief
Hardship Relief is given to a business to help it recover from a temporary, unexpected crisis, such as a serious loss of trade, brought about from exceptional circumstances.

• Rural Relief
If your business runs from an area with a population of 3,000 or below, you may be able to receive up to 100% off your business rates. To be eligible you have to be the only village shop or post office with a rateable value of up to £8,500 or the only public house or petrol station with a rateable value of up to £12,500.

• Charitable Relief
Organisations that are recognised as charities or amateur community sports clubs can claim up to 80% relief off business rates, as long as the property is used for charitable purposes.

• Enterprise Zones
Enterprise Zones are designated areas across England that offer tax breaks to small businesses. Other benefits include simplified local authority planning for developments such as new industrial buildings and government support for the installation of superfast broadband for your business.

To find out if you fit the criteria for any additional discount, contact your local council.

Take a look at our finance and legal posts for more handy advice on saving money and financing your business.

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