21st October 2020
Roger Hannah
Business rates, and small business rates too, are a tax on a property which is used for business purposes and are charged on commercial and business buildings – these buildings can include shops, warehouses, offices and factories – and the charge can be applied to most non-domestic properties and on both big and small businesses. Small businesses rates can be a headache to sort out, but as a business owner, it’s best to get to grips with them and understand how they work, the way they are calculated and what you need to pay.
How Much Are Small Business Rates?
Small business rates tend to be calculated using the property’s “rateable value”. A rateable value is what the property’s estimated value is on the open market and, typically speaking, revaluation occurs every five years and the last revaluation (conducted by the Valuation Office Agency (VOA) came into effect on 1 April 2017. It is possible to estimate how much your small business rates may be by multiplying your property’s rateable value with the relevant uniform business rates multiplier for the relevant financial year. .
Due to Covid-19, the Government has introduced a business rates holiday for the retail, hospitality and leisure sectors in order to support them through the disruption of Covid-19. The businesses in these sectors won’t need to pay business rates in the year 2020-21, however, the Government has pledged to review the business rates system going into the autumn.
What If My Rates Are Wrong?
If you think that your small business rates are wrong, then this isn’t uncommon. A large proportion of business owners believe that the rateable value of their property is wrong and, if your rateable value is wrong, then there is a chance that your business rates are too. If you feel like your rates are wrong, then you should check the VOA’s rateable value guides for your property. It might also be worth comparing with other, similar properties in the area and if you still think that your small business rates are wrong, then you can apply to have it changed through the Governments website.
Small Business Rates Relief
There are a range of different small business rate reliefs available for some properties. The small business rate relief is often considered to be the most useful for small businesses and is available if your commercial property has a rateable value of under £15,000 and if your business uses less than one property. Full relief is also available and can be applied to properties which have a rateable value of £12,000 or below.
If you are a small business, but you don’t qualify for the small business rates relief scheme, then your bills will still be calculated using the lower small business multiplier, which is available for properties with a rateable value of under £51,000.
Working From Home
If you work from home, then you generally won’t need to pay small business rates if you use a small area of your home to work from or for business purposes. But, there are some circumstances where you may need to pay business rates on top of your Council Tax, especially if:
- Your property is split between domestic and business, such as a flat above a shop
- You sell things to people who visit your property
- You have employees at your property
If you aren’t sure as to whether or not you should be paying business rates on top of your council tax, then it is best to contact them directly or the VOA.
Calculating Your Small Business Rates
If you want to calculate your small business rate, then you will need to find out the rateable value of your property. By knowing this, you will then be able to find the correct multiplier, as this depends on the rateable value of your property. Then, you can deduct any of the rate reliefs which you are entitled to and then you are left with what should be your small business rate. The Government has a handy business rates calculator on their website which you can use as a guide.
This article should be used as a guide only, but if you would like more help with your business rates, please get in touch with us for further help and advice.