Small business rate relief & business rates
Did you know that business rates are payable on non-domestic properties such as offices, shops and factories. And that the rates are worked out on the rateable value of the property, but there are various reliefs available including small business rate relief. You should also know that the relief is not given automatically and that, as a small business, you could be overpaying, not realising you are entitled to the relief. However, all is not lost; claims for your relief can be made retrospectively, giving rise to a repayment of overpaid business rates.
So how do you calculate business rates, we hear you ask? Well, they are worked out by applying the relevant multiplier (set in terms of pence in the pound) to the rateable value of your property. In addition, we know that the most recent valuation took place in 2015, and is used as the basis for all business rate calculations from April 2017 onwards. And you can check the rateable value of your business property online. You should note that the rateable value is based on the annual rent that could be expected to be received if the property were let on a commercial basis.
To add to that, we also know that in England, there is a standard multiplier and a small business multiplier. The standard multiplier, set at 50.4p for 2019/20, applies to business properties with a rateable value of £51,000 or more. The small business multiplier, applying to business properties with a rateable value below £51,000, is set at 49.1p for 2019/20. The multipliers for the City of London are higher – the standard multiplier is 51p and the small business multiplier is 49.7p. In Wales, there is a single multiplier of 52.6. So, for example, the annual business rates for a property with a rateable value of £20,000 outside London would be £9,820 – found by applying the small business multiplier of 49.1p to the rateable value of £20,000.
Furthermore, if your business is in England, small business rate relief is available where your business has only one property and the rateable value of that property is less than £15,000. Full relief is available where the rateable value is less than £12,000 – business with a single property which has a rateable value of less than £12,000 pay no business rates. And taper relief is available where the rateable value is between £12,001 and £15,000. The taper reduces the amount of relief from 100% for properties with a rateable value of £12,000 to 0% for properties with a rateable value of £15,000. The percentage reduction is found by applying the following formula: (£15,000 – x) / (£15,000 – £12,000) x 100%.
Let’s say you are a small business operating from offices with a rateable value of £12,750, and your business is based in Norfolk. The business rates applicable to you, before deducting small business relief, are found by applying the small business multiplier of 49.1p to the rateable value of £12,750, giving you a figure of £6260.25. Taper relief is available. The percentage reduction is 75%. Thus, applying small business relief reduces your business rates by 75% to £1,565.06.
Unless you make a claim, your business will not benefit from the relief. And your claim must be made to the relevant council, either in writing or online. Once you’ve made your claim, it will be applied to future years. What’s more, claims can be backdated, so check bills since the start of the current system in April 2017. On top of that, you may not realise this but, small business rates relief is not given automatically, and you may be due sizeable repayments. Unless you make that claim, you will continue to overpay. So take action today!
Lotuswise Chartered Accountants and Business Consultants can help you make sense out of business rates, and help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.