05/06/2018

How to navigate business rates for small businesses

Business rates for small businesses continue to be a significant issue for smaller retailers competing against online equivalents, whose scale and reduced overheads gives them an advantage in an increasingly competitive market.

With the likes of larger firms such as Marks and Spencer facing turbulent times and consolidating assets, the pressure has never been greater in the high street.

In April 2018, the business rates multiplier was further increased for the first time following the revaluation of April 2017. The Spring Statement announced that the next revaluation will move to 2021 as the first in a new three-year cycle set to address the issues that come with the current standard of five years.

As high street retailers and smaller companies continue to feel the financial impact of substantial business rates, a review on business rates for small businesses is a welcome prospect.

What relief is available on business rates for small businesses?

Until the current regime is reformed, small enterprises should ensure they are taking full advantage of the small business rates relief they are entitled to.

Rules on business rates for small businesses mean that any small business with a rateable value lower than £12,000 should be zero rated and exempt from business rates bills. Alternatively, those small businesses with a rateable value between £12,000 and £15,000 will also be entitled to rates relief on a sliding scale between 0% and 100%.

Even if your business is above the £15,000 cap, but below £51,000, you should be charged the ‘small business multiplier’ rate. Check with your local authority that the business rates for small businesses are being applied to your bill.

While rates revaluations can be contested, the system is hard to navigate and time-consuming and many small firms can take comfort in knowing that a specialist can conduct a thorough investigation on their behalf.

Negatively affected by the revaluation?

If you were negatively affected by the revaluation then check that you are not being asked to pay too large an increase all at once. Transitional relief is available to cap and phase your bill over five years and no business is expected to pay more than 7.5% extra in the 2018-2019 financial year.

While the current system remains fundamentally flawed, property-centric small businesses have suffered from the lack of transparency and understanding of exactly which businesses qualify for rates relief.

Further easing on the impact of business rates for small businesses

With the effect of rate rises really hitting home, a further series of reliefs were introduced to ease the impact of small business rates. This included a £1,000 discount for local pubs and transitional relief to cap the scale of increase.

Finally, if you run your business from home then generally you will not have to pay business rates in addition to your council tax. However, if your property is split into parts (i.e. a flat above a shop), you sell things to people who visit the property, or you employ someone at your property you may be required to pay small business rates.

For a free no-obligation discussion about small business rates relief or for further information please contact us.

Small business rates relief