Some small businesses qualify for small business rate relief but it’s not always clear which businesses do. This article will help you find out.
What are business rates?
Business rates are charged on many non-domestic properties such as factories, offices, shops, pubs, guest houses, or warehouses. If you use part of a building or a while building for work purposes you may have to pay business rates.
What Is small business rate relief?
Small business rate relief is something that is given to small businesses if their rateable value (market value) of the property they work in is less than £15,000. Small businesses are also entitled to relief if they use just one property. However, in some circumstances, you may still have business rate relief if you have two or more properties.
Do I qualify for a small business rate relief?
Your business may qualify for a small business rate relief if your business is run in an exempted building. These are places that are used to look after people with disabilities. Some farm buildings may also be exempt. If you own a stable and your horses are used for farming you may not need to pay business rates on them.
Additionally, you may not have to pay any business rates on:
- Fish farms.
- Agricultural buildings and land.
- Property that is used for the training of people with disabilities.
- Buildings that are registered as being used for religious worship.
- Church halls.
Please note that these exemptions have strict legal requirements.
If your property is located in England you can tell HMRC by using the Valuation Office Agency service.
You do not have to pay any business rates on a building that has been empty for three months. After this period of time, most small businesses will have to pay full business rates.
Some properties can ask for extended empty property relief if they are:
- A warehouse or industrial premises. They are exempt for an additional three months.
- A listed building if they are empty. Business rates will need to be repaid when they become occupied.
- A building that has a rateable value that is less than £2,900. Business rates will need to be repaid when it becomes occupied.
- A property that is owned by a charity. This is the case if the next time the property is used it will be for mostly charitable purposes.
- A community amateur sports club building. This is the case if the next time the property is used it will be used mostly as a sports club
Working from Home
If you are working from home it is unlikely that you will have to pay business rates if you use a part of your home such as a bedroom as an office. In addition to this, you will not have to pay business rates if you sell goods by post.
You may need to pay business rates in addition to council tax if your property is part domestic and part business. This is usually the case if you live above your shop.
You may also need to pay business rates if:
- You sell services of goods to those who visit your property.
- You employ people to work at the property.
- You have made changes to your home so that you can run a business.
Pubs and the Licensed Trade
In Wales and England, the VOA (Valuation Office Agency) will work out what your rateable value is. They will do this based on your annual level of trade. This is a level you are expected to achieve if the pub is operated in an efficient way. The VOA will take a look at the rental and the turnovers to determine what is a maintainable trade figure. This figure will result in a percentage being applied so the rateable value can be worked out.
The percentage will be agreed with the British Beer and Pub Association.
In Scotland, a local assessor will determine what the rateable value will be.