Should you be getting Business Rates Relief??

Who can claim, and how to to get the discounts.

You may have spotted in the news that business rates are going up from 1 April 2023. (The business rates year is from 1 April to 31 March the following year.)

A review of business rates - called a ‘revaluation’ happens every few years, when the Valuation Office Agency updates the rateable values of all business and other non-domestic properties in England and Wales. (Previously the revaluation has happened every 5 years but discussions are ongoing about whether this needs to happen more frequently.)

The updates reflect changes in the property market, as well as changes that have occurred across different business sectors and different parts of the UK.

If your business occupies a rental property, you or your landlord may have received a letter from Inland Revenue to inform you about the changes you can expect. (Don't worry if you haven't, as all the information is available on the government website).

Before we start, you may find it helpful to read this free resource from Smarta about calculating your business rates.

If you’re worried about covering the bills for your small business, you may be able to get a discount from your local council known as business rates relief. 

In most cases, you won’t need to do anything, and your bill will be updated automatically after the revaluation. But to help you prepare for the changes, we’re here to explain what relief is available and how to check your eligibility.

You can use this online service to find the ‘rateable value’ of a property in England or Wales.

Small business rate relief

You can get small business rate relief if the property used for your business has a rateable value of less than £15,000. If that’s a YES for you, your first step is to contact your local council to apply for small business rate relief.

If you’re not sure which council you fall under, click here and enter your postcode to find out.

If you don’t qualify for Small Business Rates Relief (for example, if the value of your property is higher than £15,000) you may be entitled to other forms of business rates relief.

Transitional Relief

Transitional relief is all about gradually phasing in the changes that will come into effect as a result of the latest revaluation. The increased costs to business will go up in stages over the next few years.

The Transitional Relief (TR) scheme puts an upper limit (referred to a “cap”) on the amount that a Business Rates bill can go up in a single year, to make it easier for businesses to cope with the increases. The cap is set at:

• 5% increase for small businesses

• 15% for medium businesses

• 30% for large businesses

The TR scheme is funded by the Exchequer and is expected to benefit 700,000 payers over the next 3 years. From the 2023 to 2024 tax year you’ll get transitional relief if your business property is in England and your rates go up by more than a certain amount.

You don’t need to do anything in order to benefit from the TR scheme. Your council should automatically adjust your bill. You will stop getting transitional relief when your bill reaches the full amount set by a revaluation.

If your bill is increasing from 1 April 2023

The table shows the maximum amount your business rates bill could go up by over the coming years, as a result of the recent revaluation. It may not seem like there's any good news, but without Transitional Relief, the figures would jump up immediately on 1st April 2023.

Retail, hospitality and leisure relief

If you’re running a business in one of these sectors, you could qualify for retail, hospitality and leisure relief. Some businesses can claim this type of relief in addition to other rates relief - up to a maximum of £110,000 per business.

Businesses are eligible if their premises is used as a:

• shop

• restaurant, café, bar or pub

• cinema or music venue

• hospitality or leisure business - for example, a gym, a spa or a hotel

Contact your local council to find out if you’re eligible.

Rural rate relief

This form of rate relief is designed for businesses in rural areas, where the population is less than 3,000. 

You will not pay business rates if your business is in an eligible area and either:

• the only village shop or post office, with a rateable value of up to £8,500

• the only public house or petrol station, with a rateable value of up to £12,500

Contact your local council to check you’re eligible and to apply for rural rate relief.

What if I’ve lost the eligibility I had before? 

The Supporting Small Business Scheme will cap increases at £600 for the year for businesses who lose their eligibility for either small business rate relief or rural rate relief due to the revaluations. This should help around 80,000 small businesses in the next 3 years who:

• will face a higher rates bill for their property is going up on 1 April 2023

• will lose some or all of their small business rate relief or rural rate relief

This isn’t something you need to apply for - your council will adjust your bill if you’re eligible.

What if I’m still struggling to pay?

In England, councils may be able to reduce your business rates bill using hardship relief, if you can prove to them that:

• you would be in financial difficulties without it

• giving hardship relief to you is in the interests of local people

Get some professional advice

You can also get help from a qualified rating surveyor, who will be able to determine which band your business property falls into. Find a surveyor through one of the following organisations:

• Royal Institution of Chartered Surveyors (RICS)

• Institute of Revenues, Rating and Valuation (IRRV)

• Rating Surveyors Association

Important note: You may be charged for any advice you get from a rating surveyor right from the start, so make sure you find out their fees upfront!

What if I’m running my business from home?

You do not usually have to pay business rates for home-based businesses if you:

• use a small part of your home for your business, for example if you use a bedroom as an office

• sell goods by post

If you think your business rates bill is wrong

You need to contact your local council and explain what you think is wrong. But you still need to carry on making your due payments until the council tells you otherwise. Find out how to check and challenge your business rates bill.

The information provided in this article was taken from GOV.UK in February 2023.

A note for charities and non-profits:

Charities and community amateur sports clubs can apply for charitable rate relief of up to 80% if a property is used for charitable purposes.

Your Local Authority will have a pot of money which is funded from local Council Taxpayers and can be used to provide "Discretionary Rate Relief" to top up charitable rate relief to 100%. Even if you're not a registered charity, you may be able to access some additional financial support if your organisation is helping your Local Authority meet some of its social objectives. Contact your Council for more information.