Are you making the most of business rates tax relief?
9th September 2021
COVID-related business rates relief is set to come to an end in March 2022 and has been a vital lifeline for retail, hospitality and leisure businesses negatively impacted by the pandemic. However there are still ways in which you could make the most of business rates tax reliefs now and in the future, regardless of which sector you are in.
Read our article to understand where the opportunities for current and ongoing relief are available.
What are Business Rates?
Business rates are taxes on commercial (non-domestic) properties such as restaurants, offices and retail outlets. They are a form of tax on businesses that is calculated based on “rateable value” (the value attributed to that property if it were to become available for sale). The VOA (Valuation Office Agency) assesses the rateable value of a commercial property every five years by requesting information from building owners. There is a specific tool you can use to check the rateable value for your property if you think there may have been a miscalculation. Business rates are calculated by:
- Ascertaining the rateable value of your business
- Using the correct “multiplier” using the table (below) provided by the government
- Multiplying the rateable value by the multiplier
- Removing your business rates relief
| Year | Standard multiplier | Small business multiplier |
| 2021 to 2022 | 51.2p | 49.9 |
| 2020 to 2021 | 51.2p | 49.9p |
| 2019 to 2020 | 50.4p | 49.1p |
| 2018 to 2019 | 49.3p | 48.0p |
| 2017 to 2018 | 47.9p | 46.6p |
| 2016 to 2017 | 49.7p | 48.4p |
In autumn 2021 the government will publish its report of a full review of business rates and how they are applied.
What Business Rates Reliefs are available
There are a range of reliefs available against business rates, dependent on your specific business and property characteristics.
COVID-related Business Rates Holidays
Business in the leisure, retail and hospitality business received 100% reduction in their business rates for the 2020/2021 tax year until June 2021 due to adverse economic impact caused by the pandemic. From 1st July 2021 this reduction has been capped at two-thirds and is set to continue until March 2022.
There was also a further £1.5billion in Business Rates Relief announced for those businesses outside of these sectors, but who had suffered significant negative economic impact due to the pandemic, providing an important lifeline particularly for those suppliers and businesses dependent on the hospitality, retail and leisure industries. Significantly, MCC (Material Change of Circumstance) rules have been excepted from this relief, whereby businesses are usually able to place a claim for Business Rates Relief on the basis that the rateable value has decreased due to impacts such as roadworks and external scaffolding.
The Small Business Rates Relief
One of the most useful Business Rates Reliefs, this is available to businesses if their rateable value is less than £15,000 and typically if the it uses only one property. A business may be eligible for relief if:
- It uses only one property and the rateable value is less than £15,000
- It uses one main property plus other properties but the rateable value of any of the additional properties is less than £2,889 and, in total, rateable value of all properties combined does not exceed £19,999
- The rateable value of the property is below £12,000, in which instance no business rates would be paid
For properties with a value of between £12,000 to £15,000, the rate of relief will reduce gradually from 100% to 0%. Importantly, Business Rates Relief can be backdated for up to 6 years.
Other Business Rates Reliefs
Rural Rate Relief
If your business operates in a rural area where the population is less than 3,000 then you will not pay business rates if you are either; the only village shop/post office and your rateable value does not exceed £8,500 or; the only public house/petrol station and your rateable value does not exceed £12,500.
Charitable Rate Relief
Charities and community amateur sports clubs can apply for charitable rate relief of up to 80% if a property is used for charitable purposes. In addition to this you may still be able to get discretionary relief if you’re a non-profit or voluntary organisation.
Enterprise Zone Rate Relief
This relief is calculated by the local council up to a value of £55,000 over 5 years. You could be eligible if you are relocating or starting your business within a qualifying enterprise zone.
There are also other reliefs available against Business Rates, including Hardship Relief, Retail Discount and Local Newspaper Relief.
Summary
There are a variety of reliefs available on Business Rates and you should ensure you are maximising those available for your business property. We hope this guide has given a good overview to those potentially accessible for your business.
TTR Barnes do not offer advice on small business rates relief.
Advice can by sought by contacting your local council.
All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time. This article is for general information only and does not constitute financial advice or recommendations for individual circumstances. No responsibility is taken for any actions taken on the base of the information within this article.
