Small business rates relief extended for another year
George Osborne’s Autumn Statement and Spending Review included a number of headline-grabbing announcements. However for many small business owners, especially those who are struggling or operating on tight budgets, one of the less glamorous announcements could be more important.
The Chancellor announced that the rates relief scheme for small businesses will be continued for another year. This is estimated to support up to 600,000 businesses, many of which have the smallest turnovers and profit margins.
For a small firm that is struggling and perhaps on the brink of requiring business recovery, business rates can represent one extra financial obligation that is difficult to meet.
Business rates are the taxes paid on non-residential business properties including shops, offices, pubs, warehouses and factories. Almost every business with physical premises is liable for business rates, although there are exceptions including some farm buildings and church halls. You will also be liable for business rates even if you only use part of a building.
The amount of business rates you’ll pay are graded depending on the ‘rateable value’ of the property. These are based on the annual market rent value as determined by the Valuation Office Agency.
Under the extended relief scheme, businesses using only one property with a rateable value of £12,000 or less will qualify for a discount on their business rates. Properties with a rateable value of up to £6,000 qualify for a 100%, meaning these businesses will not pay any business rates tax at all. Those with a rateable value between £6,000 and £12,000 will receive relief on a sliding scale from 100% to 1%.
Businesses can also qualify for relief if they use more than one property where each additional property has a rateable value of less than £2,600 and the total value of all the properties remains below £18,000.
By Phil Smith