Small Business Rates Relief: Everything You Need to Know About

by | Sep 20, 2022 | Knowledge Center | 0 comments

Business rates are the taxes imposed to enable the funding for services in your local authority. The business rates examples include charges on different properties, including offices, shops, and warehouses.  However, with rising inflation, the government has provided small businesses with a small business rates relief scheme.

Small business rates relief is a discount that the government offers for small businesses’ property charges. The scheme is available to all organizations that meet its eligibility criteria. Businesses in England, Scotland, Wales, and Northern Ireland can take advantage of this feasibility. However, the regulations are different for businesses operating in Scotland, Wales, and Northern Ireland.

Businesses that qualify for the scheme need to have a rateable value of less than £15,000. Moreover, the company must use one property to effectively carry out its operations. Businesses can get in touch with their local council to apply for the small business rates relief scheme in England.

So whether you already have a small business up and running, or you are still searching for small business ideas, you can learn about SBRR and stay informed about your options. This guide will give you a detailed insight into small business rate relief.

When did small business rate relief start?

The government introduced the Small Business Rates Relief Scheme (SBRR) on the first of April in 2002. The program’s primary objective was to unburden the financial stress on small businesses by reducing the taxation amount on the business-utilized property. The scheme was further enhanced and amended in April and October 2010 and it was further amended in 2017 to align with the 2017 revaluation of commercial property.

Small business rates relief regulations from 2010 to 2017

The small business rates relief scheme equips businesses with numerous benefits. According to the 2010-2017 regulations, companies with ownership of just one property can benefit from a 100% rate relief, provided that their premises have a rateable value of less than £6,000,  which means there would be no rates to pay.

Conversely, any business with more than one property can also benefit from this scheme. In such cases, companies can claim a reduction in their rates, provided that they own properties that have a rateable value between  £6,000 and £12,000.

Essentially, the small business rates relief extended to properties is offered on an attenuated basis. For instance, businesses with properties holding a lowered rateable value will receive a larger percentage relief. Additionally, the scheme denotes that the relief rate would be reduced by 1% for every £60 increase in the rateable value for properties above £6,000.

The government initially introduced the greater relief levels as a temporary tactic in October 2010, however, this strategy was set to continue until 31 March 2017.

Small business rates relief regulations 2017 onwards

The small business rates relief scheme was further revised in 2017. The new requirements allow small businesses to benefit from the rate relief if their property’s VOA business rates fall below £15,000 and if the business owns one property. In some cases, businesses that own more than one property are also eligible to get relief.

According to the revised small business rates relief scheme, businesses with properties of a rateable value of £12,000 or less will not be required to make business rate payments. Moreover, organisations holding properties with a rateable value between £12,001 to £15,000 can observe a gradual decline in the rate of relief.

For example, if your business has a rateable value of  £13,500, you can receive 50% relief, whereas if your business property has a rateable value of £14,000, you may receive around 33% relief.

In the amended version, businesses that acquire more properties over time can also continue taking advantage of the scheme. In this scenario, companies can keep getting relief on their main properties for 12 months.

Your business can still benefit from the small business rates relief on your main property after the 12-month period in the following cases:

  • The other properties acquired by your business have a rateable value of under  £2,800.
  • The total rateable value for all your properties adds up to an amount that is less than £20,000. However, if your business is running in London, the total rateable value for all the properties should fall below £28,000.
  • Your small business does not meet the eligibility criteria for the small business rates relief scheme
  • Your property in England has a rateable value of less than £51,000.

Do I qualify for small business rates relief?

The program enables ratepayers, to possession of a single non-domestic property in England, with a rateable value of less than £15,000. That said, if your business has possession of the primary property, along with other smaller properties, you can still benefit from the scheme as long as the total rateable value does not exceed £19,999 and all your properties have an individual rateable value of less than £2,899.

Additionally, your business can only acquire claim relief for one property. According to this scheme, the term ‘one property’ denotes a single hereditament as apparent in the Local Rating list. The SBRR is not affected by your writing-down allowance.

How to apply for the small business rate relief scheme?

If you want to apply for SBRR, you need to meet the criteria on every chargeable day for which you wish to claim the relief. Essentially, the ratepayers should sign off the application themselves. In the case they are not available, any authorized individual, on the behalf of the ratepayer, can sign the application.  In case of the latter, the ratepayer would be:

  • A sole trader or the owner of the business
  • A partner in a business (in case the business includes a partnership)
  • A trustee in a trust
  • A director of a limited company or a body corporate

Your application must also include the details regarding the property for which you are claiming the relief. If you have any other non-domestic properties in England, you must disclose that information in your application as well.

If your business involves a partnership and you and your partner have acquired other non-domestic properties, either collectively or independently, you must disclose all your properties in the application.

You can subsequently submit the application and wait for approval from the relevant authority. However,  you must enter accurate information when applying for small business rate relief. Submitting false or misleading information is a criminal offense.

What changes can affect relief entitlement?

If your local authority accepts your application, you can move on to the next step and inform the Council of any changes that can affect the relief entitlement. You must notify the council within four weeks after you discover a modification. This can include:

  • If one or more of your property increases in the rateable value, which is greater than the eligibility criteria in the billing authority, you will have to submit a written document to notify the Council.
  • If you acquire a property that you haven’t included in the application, you must notify the Council by submitting a new application.

Rate relief for homeowners

Homeowners who have reached the pension age can also apply for rate relief if they have reached the pension age. Additionally, you must also meet the following criteria:

  • You do not have capital over £50,000
  • You are an owner occupier
  • You are not part of a co-ownership or a rental buy scheme
  • You do not have a housing benefit or rate relief from the housing executive
  • You are not a recipient of Universal Credit.

If you meet this criterion, you can apply for rate relief for homeowners. At the time of your application, you will have to provide supplementary information, including your weekly income, capital assets, financial account or property ownership, and household status.

While the inquiries differ for every candidate, you will have to provide the following information:

  • Relationship with your partner- if you have one
  • Children or dependents
  • Other individuals that you share the ownership of the property with, besides your partner
  • Income
  • Partner’s income
  • Additional benefits you, or your partner, may receive, including wages, grants, DSS, pensions, or incomes from properties or lands you may own.
  • Additional sources of income, including the likes of stocks, shares, investments, and saving accounts, among others.

You can apply for this scheme by submitting an application and supporting documents to the Housing Executive.

The Bottom Line

Small business rate relief is a government-sponsored scheme that helps small businesses release their financial stress. However, your business must meet the eligibility criteria to qualify for the program. After that, you can submit an application to your local Council.

The application for the SBRR scheme would require details of your small business. You will also have to provide supportive documents to showcase the legitimacy of your business, including a website. If your business does not have a business website yet, you can get one made by the experts at Presseo.

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