Can you claim small business rate relief?

Business rates are payable on non-domestic properties such as offices, shops and factories. The rates are worked out on the rateable value of the property, but there are various reliefs available including small business rate relief. The relief is not given automatically and many businesses may be overpaying, not realising they are entitled to the relief. However, all is not lost; claims for relief can be made retrospectively, giving rise to a repayment of overpaid business rates.

The business rates calculation

Business rates are worked out by applying the relevant multiplier (set in terms of pence in the pound) to the rateable value of the property. The most recent valuation took place in 2015 and is used as the basis for business rate calculations from April 2017 onwards. You can check the rateable value of your business property online. 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.

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.

Small business rate relief

In England, small business rate relief is available where the 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.

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%.

Example

A small business operates from offices with a rateable value of £12,750. The business is based in Norfolk.

The business rates before deducting small business relief are found by applying the small business multiplier of 49.1p to the rateable value of £12,750, giving a figure of £6260.25.

Taper relief is available. The percentage reduction is 75%.

Thus, applying small business relief reduces the business rates by 75% to £1,565.06.

Claim the relief

Unless a claim is made, the business will not benefit from the relief. The claim must be made to the relevant council, either in writing or online. Once a claim is made, it will apply to future years.

Claims can be backdated, so check bills since the start of the current system in April 2017. Many businesses do not realise that small business rates relief is not given automatically and may be due sizeable repayments. Unless a claim is made, they will continue to overpay.