Are you Entitled to Small Business Rate Relief?

Accountants Chester – Tax Tip No. 30

Business rates are charged on non-domestic properties like shops, offices, warehouses, factories and holiday rentals or guest houses. However, if your property’s rateable value is less than £15,000 and your business only uses one property, you may be entitled to small business rate relief.

Accountants Chester | Nature of the relief

The amount of relief to which you are entitled depends on the rateable value of your business property. If this is £12,000 or less and you only have one business property, you will receive 100% relief. This means that you will not need to pay any business rates.

Where the rateable value of your business property is between £12,000 and £15,000, the rate of relief is found by the following formula:

(£15,000 – rateable value)/(£15,000 – £12,000) x 100%

For example, if the rateable value of your business property is £14,000, you will receive relief of 33.33% (£1,000/£3,000 x 100%). Similarly, if the rateable value of your business property is £13,500, you will receive 50% relief (£1,500/£3,000 x 100%).

The rate of relief gradually reduces from 100% for properties with a rateable value of £12,000 or less to 0% for properties with a rateable value of £15,000.

Accountants Chester | Further conditions for holiday lets

From April 2023, holiday lets are only eligible for business rates if certain conditions are met. To qualify, the property must be actually let as a holiday let for at least 70 nights in the tax year and available for letting as a holiday let for at least 140 nights. If the holiday let qualifies as a furnished holiday letting for tax purposes, it will meet the business rates test as this is less stringent. If the property does not meet the new business rates test, council tax will be payable instead.

Accountants Chester | More than one business property

If you have more than one business property, you may still qualify for small business rate relief. This will be the case if none of your other business properties have a rateable value in excess of £2,899 and the total rateable value of all your properties is not more than £20,000 (£28,000 in London).

Accountants Chester | Claim the relief

You will need to claim the small business rate relief if you are eligible. Contact your council to find out how to make a claim.

Accountants Chester | 2023 revaluation

Properties are revalued every five years for business rates purposes. From 1 April 2023, business rates are based on the rateable value at 1 April 2021. If your rateable value has changed, this may affect your entitlement to small business rate relief.

You may be entitled to transitional relief if your bill has increased from 1 April 2023 as a result of the revaluation, either because you have lost small business rate relief or because the relief that you received has been reduced. The relief caps the amount by which the bill can increase. If your rateable value is less than £20,000 (£28,000 in London), the amount by which your bill can increase from one year to the next is capped at 5% for 2023/24, at 10% plus inflation for 2024/25 and at 25% plus inflation for 2025/26. Transitional relief ends when your business rates bill reaches the amount calculated by reference to your new rateable value.

The council should give you the relief automatically if you are eligible but check your bill to make sure it is correct.

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