What is Small Business Rate Relief?

Small business rate relief is available to small businesses with premises below a certain 'rateable value'. It offers small businesses the chance to lower the business rate bill - an opportunity which can be very valuable, particularly for firms that are in the early stages of their life.

Business rates are paid by businesses that occupy non-domestic properties such as office space, factories or shops. There are a few types of organisation that do not have to pay business rates (as explained in our article on who pays business rates) but these exceptions are rare. You may even have to pay rates if you work from home.

Rateable Values

If your business is based in England but outside London, and the rateable value (that is, the value of the property as determined by the Valuation Office Agency) of your premises is less than £18,000, you will probably qualify for small business rates relief. If you are based in London, the maximum rateable value for eligibility increases to £22,500.

The amount of relief for which you qualify will depend on the rateable value of your premises. Under normal circumstances (that is, when small business rate relief is not applied), a multiplier of 41.4 pence is used to determine the rates that are charged. However, if the rateable value of your premises is below £6,000, your rates will be calculated using the small business multiplier. This is set at 40.7 pence for 2010-11. The rates are then reduced by 50%.

If the rateable value of your property is between £6,000 and £11,999, the small business multiplier is again used but the reduction falls on a sliding scale. For every £120 by which the rateable value exceeds £6,000, the reduction is cut by 1 per cent. So, if the rateable value of the property is £9,000, the rates are reduced by 25% rather than the full 50%.

If the rateable value of your premises is between £12,000 and £17,999 (or £24,499 if the premises is in London), the small business multiplier of 40.7 pence is again used. In these cases, though, no further reduction is applied.

Other Eligibility Criteria

You should remember that the small business rate relief scheme only applies to businesses based in England and Scotland. The Welsh Assembly runs its own relief scheme, while businesses based in Northern Ireland may be able to take advantage of a so-called 'hardship fund' to reduce their rates if they are suffering from unusual and difficult circumstances.

As of the 2010 revaluation of properties, it will not be necessary to reapply for business rate relief every year. In the past, businesses would have to demonstrate their eligibility for reliefs every year. However, it is still vital that you inform your local authority if you become ineligible for rates relief, as a result of the 2010 revaluation or any subsequent revaluation. If you think you qualify for small business rate relief you should contact your local authority. They will be able to tell you how to apply for the scheme. You can also check the rateable value of your premises on the Valuation Office Agency website.