Small Business Rates Relief In The UK- Complete Guide
Table of Contents
Because of the pandemic situation due to Covid-19 in the UK, many services have changed to protect the public and the government staff. As a result, some services are also running at a reduced rate. The government aims to minimize any troubles and continue to provide facilities to all the businesses in the UK.
As you may know, in the form of taxes, business rates are collected by the local authority from all the non-domestic properties. However, in the recent Autumn Budget, the government issued some changes and alternatives in taxes. The small business rate relief is one such change.
In this article, we- small business rates relief in UK- complete guide, we aim to provide in detail information about this change. Let’s begin!
Small Business Rate Relief
Business rates are imposed on the majority of the business properties like shops, offices, warehouses, pubs, and factories. But, it doesn’t mean the property has to be used for business development; it should be used for non-domestic purposes.
Because of the Covid-19 pandemic, the government asked for fundamental reviews on business rates, and thus, relief schemes were made for some properties. And these relief schemes are helpful for small firms- it is called small business rate relief.
The SBRR- Small Business Rate Relief scheme is the initiative of the Northern Ireland government, which focuses on supporting the business growth and sustainability of small businesses by offering some rate relief to small business owners.
The SBRR offers various levels of rate relief based on the Net Annual Value(NAV) of the commercial property. The business that qualifies this criterion receives the rat relief instantly on their annual bill citing the life of relief scheme. Plus, there is no need to apply for small business rate relief.
The SBRR scheme came into enforcement in April 2020; in the beginning, it was only there for five years but has since been extended on evaluation.
The VOA sets the RV of your business premises by utilizing property details like your rental information. You can calculate your business rate bill by multiplying rateable value (R V) with the business rate multiplier.
A non-domestic property’s RV is an assessment of the yearly rent the premises would rent for if it is available to let in the open market at fixed valuation date.
The government announced some additional rules to support small businesses affected by the revaluation in the spring budget.
The VOA, in a continuous manner, reaccess and update the RV of all commercial properties every five years. This is known as revaluation. And it is done to bring fairness to the system by evaluating the total amount payable in any business rate by reflecting changes in the commercial market.
Who Is Eligible And How Much Rate Relief Can One Except?
As I said, the eligibility criterion for the SBRR is based on the NAV of your non-domestic property.
There are three levels of SBRR viz-
- Commercial properties with a Net Annual Value (NAV) of £2,000 or less will get a reduction of 50 percent in rate relief.
- Commercial properties with a NAV above £2,000 but not more than £5,000 will have a 25 percent rate of relief.
- Commercial properties with a NAV of more than £5,000 but not more than £15,000 will get 20 percent reduced in their rate relief.
If your property has an RV ( rateable value) below £18,000 or £25,500 in Greater London, you will be considered a small business. Thus, even if you don’t qualify for SBRR, your business rate is calculated using a small business multiplier instead of the standard one. The case will be the same even if you have multiple properties and there is no immediate profit in any business except trading, in other businesses you should wait for a long time.
The business rate of relief will systematically decrease from 100 percent to 0 percent for commercial properties with a rateable value between £12,001 to £14,999.
For 2021/22, the small business multiplier is 49.9p (0.499)
And the standard multiplier for 2021/22 is 51.2p ( 0.512).
Omission In SBRR
The following omissions apply in the SBRR scheme-
- Unoccupied properties
- Partially unoccupied properties
- Automatic Telling Machines(ATMs)
- Property used for displaying advertisements.
- Car parking
- Sewage works
- Telecommunication yard
- Government properties
- Contiguous properties
- More than three properties ( multiple properties)
- Sports and recreational relief
- Transport relief
- Industrial derating
Do On Have To Apply For SBRR
There is no application process for the small business rate relief scheme. Ideally, relief will be applied instantly to your business rate relief by LPS ( Land and Property Services) if you qualify. This will ensure that if you are eligible, you will automatically receive the benefit of the rate relief.
However, you can contact LPS through the following methods-
- Email- applicationbased.[email protected]
- Tell 0300 200 7801
- Tell +44 28 9049 5794 for calling from the outside UK
- Text relay 18001 0300 200 7801
From 1 April 2012, the SBRR scheme has been changed so that taxpayers with multiple properties (more than three) of any size or a part of a chain are not eligible for this rate relief scheme.
There can be situations due to data quality issues, when LPS don’t have any relevant information to apply for the relief instantly, or they have considered when it is not due.
If you believe that you should be awarded the relief or an error in your documentation, you should contact LPS.
Moreover, if you have more than one property, you can receive small business rate relief if the rateable value (RV) of each of your other properties is more minor than £2,600.
The RV of your non-domestic property is added, and the relief is applied to the main property. And you will keep receiving any existing relief for an entire year when you get a second property.
Ending Of Double Relief
To help reserve the extension of small business rate relief to every business ratepayer, the NI executive is ending “double relief”. Double relief means that business payers are getting rate relief twice, Especially SBRR, Sports & Recreation rate relief, and industrial derating.