Unlocking Business Rate Relief: A Step-by-Step Guide for Small UK Enterprises in 2023
Navigating the complex landscape of business rates can be daunting for small UK enterprises, but understanding the various relief options available can significantly ease the financial burden. In this guide, we will delve into the different types of business rate reliefs, how to qualify for them, and provide practical advice on how to claim these reliefs.
Understanding Business Rates
Before we dive into the reliefs, it’s essential to understand what business rates are. Business rates, often referred to as non-domestic rates, are a tax on properties used for business purposes. The amount you pay is determined by multiplying the rateable value of your property by the relevant multiplier set by the government[3].
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| Year | Standard Multiplier | Small Business Multiplier |
|---|---|---|
| 2025-2026 | 55.5p | 49.9p |
| 2024-2025 | 54.6p | 49.9p |
| 2023-2024 | 51.2p | 49.9p |
| 2022-2023 | 51.2p | 49.9p |
Small Business Rate Relief
Small Business Rate Relief (SBRR) is one of the most beneficial reliefs for small enterprises. Here’s how you can qualify:
Eligibility Criteria
- Your business must occupy either one property with a rateable value of £15,000 or less, or one main property plus other properties, as long as those other properties have rateable values of less than £2,900. The total rateable value of all occupied properties must be under £20,000[1][2][5].
How Much You Will Get
- If your rateable value is £12,000 or less, you will receive 100% relief.
- For properties with a rateable value between £12,001 and £14,999, the relief is applied on a sliding scale, reducing from 100% to 0%[2][3][5].
Application Process
- SBRR is not automatically applied; you must submit an application to your local authority. If you qualify, the relief will be applied to your main property only[2][5].
Rural Rate Relief
For businesses located in rural areas, the Rural Rate Relief can provide significant support.
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Eligibility Criteria
- The property must be located in a rural settlement with a population of less than 3,000 people.
- It must be the only food shop, general store, or post office in the settlement with a rateable value not exceeding £8,500, or the only petrol filling station or pub with a rateable value not exceeding £12,500[1].
Full Relief
- From 1 April 2024, eligible properties in rural settlements may receive 100% relief if they meet the specified criteria[1].
Retail, Hospitality, and Leisure Relief
This relief is particularly beneficial for businesses in the retail, hospitality, and leisure sectors.
Eligibility Criteria
- Your business must be wholly or mainly used as a shop, restaurant, café, bar, pub, cinema, music venue, or other hospitality or leisure business[1][2][4].
Relief Amount
- For the 2023-2024 tax year, eligible businesses can receive 75% off their business rates bills, capped at £110,000 per business.
- For the 2025-2026 tax year, the relief will be reduced to 40% but will still be capped at £110,000 per business[1][2][4].
Application Process
- You need to contact your local authority to claim this relief. It is important to note that if you opt out of this relief for a particular tax year, you cannot change your mind later[1][2].
Supporting Small Business Relief 2023
This relief is designed to help businesses that have lost some or all of their small business rate relief or rural rate relief due to revaluation.
Eligibility Criteria
- This relief applies to businesses that have seen an increase in their rateable value as a result of the 2023 revaluation and have consequently lost some or all of their small business rate relief or rural rate relief[1][2].
How It Works
- The scheme caps any increase in business rates at £600 per year. This relief will be automatically applied to eligible businesses each year until the end of the scheme on 31 March 2026 or until the bill amount without the relief is reached[1][2].
Discretionary Business Rate Relief
Local authorities have the discretion to award rate relief to businesses under Section 69 of the Localism Act 2011.
Eligibility Criteria
- This relief is fully funded by the local authority and is typically awarded to businesses that can demonstrate real benefits for local residents, such as potential investments and job creation[1].
Application Process
- Applications will be considered based on the discretionary guidelines set by the local authority. It is crucial to review the Discretionary Business Rate Relief Guidelines provided by your local council[1].
Practical Advice and Examples
Keeping Records Up-to-Date
If you receive small business rate relief and there is a change in your circumstances, such as taking on an additional property, you must notify your local authority within four weeks. This ensures that your relief is adjusted correctly and avoids any potential penalties[2][5].
Example Scenario
Consider a small café in a rural area with a rateable value of £10,000. This café would be eligible for 100% small business rate relief, meaning it would not pay any business rates. If the café were to expand and take on an additional property, it could still receive relief on the main property for 12 months from the date of occupation of the new property[2][5].
Table: Comparison of Key Business Rate Reliefs
| Relief Type | Eligibility Criteria | Relief Amount | Application Process |
|---|---|---|---|
| Small Business Rate Relief | Rateable value £15,000 or less; total RV of all properties < £20,000 | 100% for RV £12,000 or less; sliding scale for £12,001-£14,999 | Apply to local authority; not automatically applied |
| Rural Rate Relief | Only food shop, general store, post office, petrol station, or pub in rural settlement | 100% for eligible properties | Check local authority’s rural settlement list; apply if eligible |
| Retail, Hospitality, and Leisure Relief | Wholly or mainly used as retail, hospitality, or leisure business | 75% for 2023-2024; 40% for 2025-2026; capped at £110,000 per business | Contact local authority; opt-out decisions are final |
| Supporting Small Business Relief 2023 | Lost some or all SBRR or Rural Rate Relief due to revaluation | Cap increase at £600 per year | Automatically applied to eligible businesses |
| Discretionary Business Rate Relief | Local authority discretion; benefits for local residents | Varies based on local authority guidelines | Apply through local authority; review discretionary guidelines |
Quotes and Insights
- “The small business rate relief has been a lifeline for our café. It has allowed us to reinvest in our business and create more jobs in the local community,” said Sarah Johnson, owner of a small café in a rural area.
- “Understanding the different types of business rate reliefs available can make a significant difference in your business’s financial health. It’s crucial to stay informed and apply for the reliefs you are eligible for,” advises John Smith, a business rates consultant. and Next Steps
Navigating the world of business rates and reliefs can be complex, but with the right information, small businesses can unlock significant financial support. Here are some key takeaways:
- Stay Informed: Keep up-to-date with the latest changes in business rate reliefs through your local authority’s newsletters and government updates.
- Apply Promptly: Ensure you apply for the reliefs you are eligible for within the specified deadlines to avoid missing out on potential savings.
- Seek Professional Help: If you are unsure about the reliefs you qualify for, consider consulting with a qualified surveyor or business rates expert.
By leveraging these reliefs, small businesses can reduce their tax burden, support their growth, and contribute to the overall health of the national economy. Remember, every pound saved can be a step towards long-term success and public sector support.
Additional Resources
For more detailed information and application forms, you can visit your local authority’s website or consult the following resources:
- Government Guide to Business Rates Reliefs: This guide provides comprehensive information on all available reliefs and how to claim them.
- Local Authority Business Newsletters: These newsletters often include updates on new reliefs and application deadlines.
- Qualified Surveyors: Organizations like the Royal Institution of Chartered Surveyors (RICS) and the Institute of Revenues, Rating and Valuation (IRRV) can offer expert advice on navigating business rates and reliefs.
By taking the time to understand and claim these reliefs, small businesses can ensure they are making the most of the support available to them, fostering growth and stability in the sector.