For many entrepreneurs and business owners in the UK, the concept of business rates can be daunting. These rates are a tax on property used for business purposes, and they are set by the local government. However, there is a silver lining. The government provides various schemes and subsidies to offer relief from these rates, a crucial support for many businesses. In this comprehensive guide, we’ll walk you through the different types of business rates relief that your business may be eligible for, and how to apply for them.
Understanding Business Rates
Before diving into the types of business rates relief available, it’s important to have a solid understanding of what business rates are. Business rates, or non-domestic rates, are a tax on properties used for business purposes. They’re set by the local government and based on the rateable value of your property. The rateable value is an estimate of the open market rental value of your property, as determined by the Valuation Office Agency (VOA).
Each year, the government sets a multiplier, which is then multiplied by your rateable value to determine your business rates. However, not every business will have to pay the full amount of business rates. Some may qualify for relief or reductions based on certain criteria.
Types of Business Rates Relief
There are various types of business rates relief that the UK government offers. These can significantly reduce the amount of business rates you need to pay, providing you with some financial breathing room.
Small Business Rates Relief
If you have a small business, you may be eligible for Small Business Rates Relief. You can get this relief if your property’s rateable value is less than £15,000. If your rateable value is under £12,000, you won’t pay business rates at all. For properties with a rateable value of £12,001 to £14,999, the rate of relief will gradually decrease from 100% to 0%.
Retail Discount
For retail businesses, the government offers a Retail Discount. In the 2024/25 financial year, the discount will be 50% for eligible retail properties with a rateable value less than £51,000. This is subject to state aid limits.
Rural Rate Relief
If your business is in a rural area with a population below 3,000, you could be eligible for Rural Rate Relief. Businesses that qualify for this relief can get up to 100% off their business rates.
How to Apply for Business Rates Relief
You can apply for business rates relief through your local council. You’ll need to contact them directly, as each council handles their own business rates relief applications. You may need to complete a form or provide supporting documents to demonstrate your eligibility.
Multiplier and Transitional Relief
Each year, the government sets a business rates multiplier. This figure is used to calculate your business rates based on your property’s rateable value. However, when the multiplier changes significantly from year to year, the government offers Transitional Relief. This scheme helps businesses adjust to large changes in their bill by capping the amount their bill can increase or decrease each year.
Conclusion
It’s evident that the range of business rates relief schemes offered by the UK government can provide significant financial relief for businesses. Whether you’re a small business, a retail store, or situated in a rural area, there’s likely a relief scheme that you could benefit from. By understanding these schemes and how to apply, you can ensure that your business takes full advantage of the relief available.
Retail, Hospitality and Leisure Relief
In response to the financial hardships brought about by circumstances such as the Covid-19 pandemic, the UK government introduced the Retail, Hospitality and Leisure Relief (RHLR). This relief scheme has proven to be a vital lifeline for many businesses in these sectors, alleviating some of the financial pressure.
Under this scheme, eligible businesses in the retail, hospitality and leisure sectors can receive a discount on their business rates. In the 2024/25 financial year, RHLR offers a 100% discount for eligible businesses up to a maximum of £2 million per business for properties that were forced to close as at 5 January 2024 due to the national lockdown. For businesses that were not required to close but were severely impacted, the discount is capped at £105,000 per business.
The retail, hospitality and leisure sectors encompass a wide range of businesses such as shops, restaurants, cafes, drinking establishments, cinemas, live music venues, and properties for personal care, such as hairdressing salons and nail bars. If your business fits into any of these categories, the RHLR could provide substantial financial assistance.
Applying for the RHLR is done through your local council. Similar to other rates relief schemes, each local government may have slightly different application procedures, so it’s advisable to contact your council directly to understand the specific requirements.
Discretionary Relief
In certain cases, local authorities have the power to grant discretionary relief to some businesses. This provides an additional avenue for businesses to receive financial support in scenarios where they do not necessarily meet the criteria for the more established rate relief schemes.
Typically, discretionary relief is intended for non-profit organisations or businesses that serve a community or philanthropic purpose. However, it can also be extended to businesses undergoing hardship or contributing positively to local economic growth.
For instance, if a business is providing essential services to the local community or creating employment opportunities, it may receive discretionary relief even if it doesn’t fall under the standard categories for rate relief. This can be a valuable source of relief for businesses that may otherwise be ineligible for other schemes.
Discretionary relief is granted on a case-by-case basis, and each local government may have different criteria. Therefore, business owners interested in applying should contact their local council for detailed information regarding eligibility and application procedures.
Business rates relief schemes are a crucial component of government finance designed to support businesses, particularly during challenging periods. As we’ve outlined, there’s a variety of relief schemes available, each catering to different business types and circumstances. These include Small Business Rates Relief, Retail Discount, Rural Rate Relief, Retail, Hospitality and Leisure Relief, and Discretionary Relief.
Whether you’re a small business owner, operating in the retail or hospitality sector, or based in a rural area, there is likely a relief scheme that is applicable to you. Moreover, understanding these schemes, their respective criteria and how to apply, is vital to ensure that your business benefits from the available financial assistance.
In conclusion, being proactive in seeking out information about business rates relief and making timely applications can result in significant savings, helping your business weather the storm during turbulent times and thrive in favourable conditions. Always remember to consult with your local government or the Valuation Office Agency for the most accurate and current information on business rates relief.
