Business rates are charged on non-domestic properties such as shops, offices, factories and warehouses. They are based on the rateable value of the property, set at in the form of pence per pound of rateable value.
The current system of business of rates in England came into effect from 1 April 2017, based on valuations as at 1 April 2015. The rateable value is the annual rent that the property would fetch in the open market.
There are two multipliers in England – the standard multiplier and the small business multiplier. The standard multiplier applies where the rateable value is £51,000 or more and the small business multiplier applies where the rateable value is less than £51,000. For 2019/20 the standard multiplier is 50.4p outside London and 51p in the City of London and the small business multiplier is 49.1p outside London and 49.7p in the City of London.
There are various reliefs available which may reduce or even eliminate the business rates bill, including small business rate relief. This is available where the rateable value is £15,000 or less where the business only has one property. Full relief of 100% is available where the rateable value is £12,000 or less, with taper relief applying where the rateable value is between £12,000 and £15,000, such that the relief gradually reduces from 100% for a property with a rateable value of £12,000 to nil for a rateable value of £15,000.
If the business has more than one non-domestic property, small business rate relief is available as long as none of the other properties has a rateable value in excess of £2,899 and the total rateable value of all properties is not more than £20,000 (or £28,000 in London).
However, there is a sting in the tail in that the relief is not given automatically and must be claimed. This is something that is often overlooked and clients may unwittingly be paying significantly higher business rates than they should be. It is advisable to check clients’ business rates business, and where small business rate relief has been missed make a claim (to the relevant Council). Claims can be made retrospectively, from 1 April 2017 under the current rules, which may trigger a welcome refund. Once a claim has been made, the relief should be given automatically going forward – there is no need to make a separate claim each year.
Written by the Tax Advice Network