Previously announced legislation allows hotel, leisure, and retail businesses to get 66 per cent business rate relief through the end of the fiscal year 2021-2022. (April 5 2022). Nurseries are eligible for the same discount. To qualify, your company must be on Ofsted’s Early Years Register, offer care and education for children up to five (the early year’s foundation stage), and not be a local authority-run nursery.
You do not need to take action if these new business rate relief measures apply to your company. Your local municipality will immediately apply your discount, which may need re-issuing your bill. You may qualify for business rate reduction under the government’s Small Business Rates Relief program (SBRR) if you own a small company. Are you unsure whether you qualify for small business rates relief? And how much money will you truly save? And how are you going to obtain it?
Small Business Rates Relief – Complete Guide
What exactly are business rates?
Business rates are levied to help pay for local government services. The government levies business rates on properties such as offices, stores, bars, and warehouses — most non-domestic buildings are subject to business rates.
They may even be levied if just a portion of a building is utilized for non-domestic purposes.
How much do business rates cost?
The ‘rateable value’ is used to determine business rates. The rateable value is the estimated market worth of a property. The most recent revaluation, undertaken by the Valuation Office Agency (VOA) and effective on April 1, 2017, corresponds to values as of April 1, 2015. Revaluation occurs every five years on average.
It suggests that revaluation for 2023 is currently beginning. The VOA is contacting companies to obtain rental information – if you haven’t already, check for a letter.
You may calculate your business rates by multiplying the rateable value of your property by the applicable number.
Is it necessary for me to pay business rates?
In most circumstances, if you utilize the property for commercial purposes, you must pay business rates on it. It includes not just stores, offices, bars, warehouses, and factories but also vacation homes (which you rent out) and other rental assets.
What about company taxes if you operate from home?
If you utilize a piece of your home for business activities, you may be required to pay business rates on that portion of the property. It does not apply if you merely use your bedroom as an office or sell items from your house. However, business rates may be levied if a portion of your house is entirely used for business – known as ‘non-domestic activity’ – or if clients or personnel spend time at the property. Contact the Valuation Office Agency to determine if you must pay and how much (VOA).
How can I calculate company rates?
You must first determine your property’s ‘rateable value’ to calculate your business rates. The VOA manages this, and the open market rental value of the property on April 1 2015, is presently used to determine how much you will be charged for business rates.
To figure out how much you’ll have to pay, multiply the rateable value of your property by the multiplier (which tells you the number of pence you will pay per pound of rateable value). Use the usual multiplier if the rateable value is £51,000 or more. The small business multiplier may use if the rateable value is less than £51,000.
If your company expands to the point that you need to relocate or merge two previously different properties, you must notify the VOA. If you do not do this promptly, you may be required to pay a backdated increase on your account.
An example of calculating your company rates
Assume you own a small store at £10,000 in rateable value. Because it is less than £51,000, you would use the small business multiplier, 49.1 pence for 2019-2020. £10,000 multiplied by 0.491 equals £4,910â€. As a result, the default level of your business rates for the year is £4,910. However, if your rateable value is less than £15,000, you may be eligible for a small business rate reduction.
What exactly is Rural Rate Relief?
Rural Rate Relief is a 100% reduction on business rates provided in England in certain situations to enterprises situated in rural regions with a population of less than 3,000.
Your small company must be a village’s only store or post office, with a rateable value of up to £8,500.
The sole public house or gas station in a community, having a rateable value of up to £12,500
The rules for business rate relief vary in Scotland, Wales, and Northern Ireland.
What exactly is transitional relief?
- Transitional relief restricts the amount your bill may fluctuate due to revaluation each year.
- If you qualify, modifications to your bill will be phased in gradually.
- If your property is in England, you are eligible for transitional compensation.
- Rates rise or fall by more than a particular amount.
- If you qualify, your council will immediately alter your charge.
Both determine the amount your bill may fluctuate from year to year:
- The rateable value of your property
- Whether your bill has increased or decreased due to reassessment
- You no longer qualify for temporary assistance when your debt reaches the full amount established by a revaluation.
- The fiscal year for business rates runs from April 1 to March 31 of the following year.
What exactly is charitable rate relief?
If a property is utilized for charity purposes, charities and community amateur sports clubs may apply for business rates charitable rate reduction of up to 80%. You may potentially be able to increase the 80% reduction to 100% (this is known as discretionary relief).
Small business rates relief (SBRR) is a Northern Ireland government project that aims to encourage the development and sustainability of small companies in Northern Ireland by granting rate relief to select small business owners. The SBRR gives varying degrees of rate relief based on the commercial property’s Net Annual Value (NAV). During the duration of the assistance plan, qualifying firms will automatically get a rate reduction on their yearly payment. SBRR applications are not required.