Small Rate Relief

Some small firms seem unaware that they can get rate relief if they only use one property and its rateable value, which is set by the Valuation Office Agency, is less than £12,000.

However, the facts are that a small firm will get 100 per cent relief until 31 March 2014, which has been doubled from the usual rate of 50 per cent, for properties with a rateable value of £6,000 or less.

This means that the business owner won’t pay business rates on properties with a rateable value of £6,000 or less. However, the rate of relief will gradually decrease from 100 per cent to 0 per cent for properties with a rateable value of between £6,001 and £12,000.

If a business owns more than one property, it could get small business rate relief if the rateable value of each of the other properties is less than £2,600. The way it works is that the rateable values of the properties are added together and the relief applied to the main property.

However, if a business owner’s property has a rateable value below £18,000, or £25,500 in Greater London, they are still considered to be operating a small business.

Therefore, even if they do not qualify for small business rate relief, their business rates will be calculated using the small business multiplier instead of the standard one; this is the case even if they have multiple properties.

Local councils use what are called multipliers to calculate a firm’s business rates bill, these multipliers indicate the percentage or pence in the pound the firm pays in business rates.

Since these multipliers can appear quite complicated, asking a professional source, such as our team, for help is advisable when working out rateable values.
Rob Chedzoy specialises within providing tax planning advice, support and guidance to owner-managed businesses.

Posted in Blog.