APPLYING FOR BUSINESS RATE RELIEF: Getting small business rate relief from your local council is not an automatic process.
You would also need to make an application to get:
- Rural rate relief
- Charitable rate relief
- Enterprise zone relief
- Hardship relief
But, your local council authority does apply certain types of business rate reliefs as an automatic process. They include:
- Exempted buildings and empty buildings relief.
- Transitional relief when rates change by more than a certain amount after revaluation.
- Relief for public houses (pubs).
Business Rates Help for Businesses
The UK Government announced new measures on business rates in the Spring Budget 2017. The aim was to help companies in England cope with the steepest of increases. Extra relief and the business rates help for businesses followed the 2017 revaluation.
Commercial Properties affected by Local Disruption
Severe local disruptions (e.g. building works, severe flooding, road works) can affect businesses. As a rule, you can get a temporary rate reduction for an external disruption.
If it happens, you should use the Valuation Office Agency service to report something that changes the value of your premises.
Note: You can contact your council about a business rates bill if you feel you should be getting extra rate relief. Business rates relief schemes differ in Scotland, in Wales, and in Northern Ireland.
Small Business Rate Relief Regulations
As a rule, to qualify for small business rate relief (SBRR) the commercial property:
- Must have a ‘rateable value‘ that is less than £15,000.
- Should be the only building that you use for the business. Some exceptions apply for multiple properties (see below).
There is only one way to apply for small business rate relief. You will need to contact your local council to start the application process.
Note: The outcome of the rates revaluation 2017 could mean you no longer qualify for small business relief. In this case, your monthly bill would not increase by more than £50 from the 1st of April 2017 to the 31st of March 2018.
Small Business Rates Relief Amounts
Having a rateable value not over £12,000 means you will not pay business rates on the property. But, properties with a rateable value between £12,001 and £15,000 have a rate of relief stepping down from 100% to 0%.
Small Business Rate Relief Examples:
A rateable value of £13,500 results in a 50% reduction off the bill.
A rateable value of £14,000 results in a 33% reduction off the bill.
Using More than One Commercial Property
It is not uncommon for some businesses to operate from a second property. If so, you would continue getting any existing rate relief on the main property for twelve (12) months. Small business rate relief (SBRR) could continue on the main property after 12 months if (both):
- The rateable value on any of the other commercial properties is not over £2,899.
- The total rateable value of all the business properties is less than £20,000. The upper threshold is £28,000 in London.
Businesses with a Rateable Value below £51,000
Not all business properties in England will qualify for small business rate relief. Those with a rateable value under £51,000 get the bill calculated using a small business multiplier. Check out a simple guide that explains how to estimate business rates in England and Wales.
Note: The small business multipliers used to calculate rate bills in the City of London are higher.
Rural Rate Relief Threshold
The business must be in a rural area with a population less than 3,000 to get rural rates relief. But, certain types of property located in an eligible area is not subject to any business rates if either:
- It is the only post office or the only village shop and its ‘rateable value‘ is not more than £8,500.
- It is the only public house or the only petrol station and its rateable value is not more than £12,500.
Note: The outcome of the rates revaluation 2017 could mean you no longer qualify for small business relief. In this case, your monthly bill would not increase by more than £50 from the 1st of April 2017 to the 31st of March 2018. Contact your local council to check if you qualify and to apply for rural rate relief.
Charitable Rate Relief
As a rule, you must use the property for charitable purposes to get charitable rate relief. But, if you run a charity or a community amateur sports club you may qualify for a reduction up to 80%. Your local council will confirm whether:
- The property is eligible for charitable rates relief.
- A ‘discretionary relief’ or top up discount to 100% would apply.
If the Property Does Not Qualify for Charitable Rate Relief
Certain types of non-profit or voluntary organisations may still be able to get discretionary relief. You can ask for further information from your local council authority.
Enterprise Zone Relief
Your business might qualify for rate relief if you start up in, or relocate it to, one of the UK enterprise zones. The council will work out how to apply the relief. But, it could be as much as £55,000 per year for a period of five (5) years.
Exempted Buildings and Empty Buildings Relief
There are some property types that get an exemption from business rates. But, the building must meet strict legal requirements to be exempt from the payment.
Some examples of properties that are not subject to business rates include:
- Agricultural land and its buildings. The exempted building rules also extend to fish farms.
- Buildings used for training or for the welfare of disabled people.
- Buildings registered for public religious worship or registered as a church hall.
Note: The Valuation Office Agency service deals with exempted buildings in England. You can contact them to report an exempt property. The reporting process differs for properties in Wales or to appeal 2010 business rates.
As a rule, empty buildings are not subject to business rates for three (3) months. In most cases, businesses must start paying full business rates after this period.
Even so, certain types of properties can get extended empty property relief. For example:
- Buildings that have a rateable value less than £2,900 (until they become reoccupied).
- Building used by community amateur sports clubs. This only applies if the next user of the property will use it ‘mostly’ as a sports club.
- Industrial premises can get a further exemption for an extra three (3) months (e.g. warehouses).
- Listed buildings (until they become reoccupied).
- Properties owned by charities. This only applies if the next user of the property will use it ‘mostly’ for charitable purposes.
Note: You should contact your local council to inform them if the property becomes vacant.
Hardship Relief Business Rates
Councils in England can reduce a business rates bill using a business rates relief scheme called ‘hardship relief’. But, to qualify, you must meet certain requirements of the local council, such as (both):
- Satisfying the council that you would be in financial difficulties without hardship relief business rates.
- Satisfying the council that giving you hardship relief is in the interests of people in the local community.
Note: You can contact the nearest council authority to explain your situation if you feel that you qualify for the hardship relief.
Transitional Relief Business Rates
In most cases, revaluation by the Valuation Office Agency changes rate bill amounts. But, getting ‘transitional relief’ limits the amount it can change each year.
Thus, business rate bill changes get phased in ‘gradually’ for those who qualify. You might get transitional relief if:
- The location of the property is in England.
- The rates increase or decrease by more than a set amount.
Note: The council adjusts the rate bill by automatic process for those who are eligible for transitional relief.
Rate Bill Changes from Year to Year
The amount that a bill can change by from one year to the next year will depend on (both):
- The ‘rateable value‘ of the property.
- Whether the bill is going up or going down as a result of the revaluation.
Note: Transitional relief stops when the bill reaches the full amount set by a revaluation. In the United Kingdom, the business rates year runs from the 1st of April to the 31st of March in the following year.
If the Rate Bill is Increasing
|Rateable Value||2017 to 2018||2018 to 2019||2019 to 2020||2020 to 2021||2021 to 2022|
|Up to £20,000 (£28,000 in London)||5.0%||7.5%||10%||15%||15%|
|£20,001 (£28,001 in London) to £99,999||12.5%||17.5%||20%||25%||25%|
|£100,000 (and over)||42%||32%||49%||16%||6%|
If the Rate Bill is Decreasing
|Rateable Value||2017 to 2018||2018 to 2019||2019 to 2020||2020 to 2021||2021 to 2022|
|Up to £20,000 (£28,000 in London)||20%||30%||35%||55%||55%|
|£20,001 (£28,001 in London) to £99,999||10%||15%||20%||25%||25%|
|£100,000 (and over)||4.1%||4.6%||5.9%||5.8%||4.8%|
Transitional Certificate Value
The local council uses a transitional certificate value. It replaces the usual rateable value in the business rates calculation for the property. You should contact the Valuation Office Agency (VOA) if you disagree with the value of the transitional certificate.
Businesses Qualifying for Retail Discount
Your local council can confirm if your business is going to qualify for a retail discount, such as if it is a:
- Bar, café, or restaurant
- Cinema (or music venue)
- Hospitality or leisure business (e.g. casino, gym, hotel, spa)
Eligible businesses could receive a 100% discount off the business rates bill for the 2021 to 2022 tax year. Plus, the retail discount is available on top of any other business rates relief.
Local Newspaper Relief
Using a property as office premises for the journalists or reporters of a local newspaper (not magazines) means you may qualify for local newspaper relief (e.g. a reduction of £1,500 per year).
The relief only applies to one property per newspaper (even if you use several properties as offices for the same newspaper). Likewise, it only applies to one newspaper title even if there are several local newspapers using the same office.
Nurseries Business Rates Relief
To qualify for nursery (childcare) discount 2021 to 2022 your business needs to be on the Early Years Register with Ofsted and the premises must be used to provide the Early Years Foundation Stage of education (EYFS).