Small business tax relief: how it works and how to challenge your business rates valuation

If you own a non-domestic property, you’ll have to pay business rates, although you won’t have to pay any council tax, which can be more expensive.  

We explore what business rates are, what type of properties pay it and whether you can get tax relief. 

Summary 

• You pay business rates when you own a company that uses a non-domestic property. 

• You may be eligible for rate relief depending on the rateable value of your property. 

• Unbiased can connect you with an accountant who can help with your tax queries. 

What are business rates? 

If you own a business with physical premises, you’ll pay business rates. 

These rates apply to most non-domestic properties, such as pubs, shops, offices, factories, warehouses, holiday rental homes and guest homes. 

In February or March every year, you’ll receive a business rates bill from your local authority, which is for the following tax year.  

It’s important to consider the impact of business rates and take advantage of tax relief. 

What is small business tax relief? 

You may be able to cut your tax bill by getting relief from your local council for business rates, which you may need to apply for. 

Business rates are based on your property’s ‘rateable value.’ Your rateable value is based on estimates by the Valuation Office Agency on how much it would cost to rent for a year on 21 April 2021.  

You may be able to claim relief up to 100% on your business rates bill, but this depends on the rateable value.  

For example, you don’t pay business rates on a property with a rateable value of £12,000 or less, provided that this is the only property your company uses. 

If the property you use has a rateable value of £12,001-£15,000, the amount of tax relief will reduce.  

For example, you’ll receive 50% tax relief if your property has a rateable value of £13,500, which will reduce to 33% tax relief if the rateable value is £14,000 instead. 

Can I get small business tax relief if I have more than one property? 

If you get a second property, you’ll get tax relief on your original property for 12 months – and after this, if: 

• Your other properties don’t have a rateable value of over £2,899. 

• The total rateable value of all properties is lower than £20,000 or £28,000 in London. 

Does small business tax relief vary throughout the UK? 

Yes, small business rate relief can vary in Scotland, Wales, and Northern Ireland. It can be offered under different scheme names, and different rateable values can be used. 

Small Business Bonus Scheme (Scotland) 

In Scotland, small businesses can apply to the Small Business Bonus Scheme and get non-domestic rates relief providing: 

• The overall rateable value of all business premises is £35,000 or less. 

• The property is actively occupied. 

• The rateable value of individual properties is £20,000 or less. 

You don’t pay business rates if the rateable value of your property is £12,000 or less. 

The amount of rate relief falls from 100% to 25% for properties with a rateable value of between £12,001 and £15,000. 

For properties with a rateable value of between £15,001 and £20,000, the rate relief falls gradually to 0%.  

Have more than one property? You won’t pay business rates if the overall rateable value is £12,000 or less. 

If the rateable value is between £12,0001 and £35,000, rate relief is:  

• 25% on each property that has a rateable value of below £15,000. 

• 25%-0% rate relief for each property with a rateable value of between £15,001 and £20,000.  

You can apply for the Small Business Bonus Scheme via your local council.  

Small Business Rates Relief (Wales) 

You don’t have to pay any business rates in Wales if your property has a rateable value of £6,000 or less. 

For properties with a rateable value of between £6,001 and £12,000, rate relief is tapered from 100% to 0%. 

You can only get Small Business Rates Relief for up to two properties per company in each local authority.  

Rate relief should be automatically given to anyone eligible from their local authority. You should contact your local council if you are eligible and haven’t received any rate relief.  

Small Business Rate Relief (Northern Ireland) 

The Small Business Rate Relief scheme in Northern Ireland offers rate relief based on the net annual value (NAV) of your property.  

You’ll receive: 

• 50% rate relief for business properties with a NAV of £2,000 or less. 

• 25% rate relief for business properties with a NAV of between £2,001 and £5,000. 

• 20% rate relief for business properties with a NAV of between £5,001 and £15,000. 

You don’t need to apply for the scheme, as rate relief is automatically applied to your business rates bill if you’re eligible. 

You should contact your local authority if you’re eligible but haven’t received any rate relief.  

What can I do if I am not eligible for small business rate relief? 

If your company is based in England and you are not eligible for small business rate relief, you can have your business rates calculated differently. 

A slightly lower ‘small business multiplier rate’ can be used instead of the standard rate, provided your property has a rateable value of under £51,000.   

Are any buildings exempt from business rates? 

Some buildings are exempt from business rates, including: 

• Agricultural land and buildings. 

• Places of worship. 

• Properties used for the training and welfare of disabled people. 

How do I calculate my small business rates? 

To calculate your small business rates, you need to: 

• Find out the rateable value of your business premises based on its open market rental value in April 2021.  

• Check this table to find the right ‘multiplier’ – the standard applies to rateable values of £51,000 or more, while the small business multiplier applies to rateable values under this amount.  

• You then multiply the rateable value by the multiplier to determine how much business rates you’re liable for. 

• Finally, deduct any business rate relief you’re eligible for to determine how much you need to pay.  

How do I claim rate relief for my small business? 

While some rate relief schemes work by automatically applying any relief to business rates bills, this isn’t the case for all. 

It’s a good idea to contact your local council to check eligibility for small business rate relief.  

Can I get rate relief for more than one business? 

You can only get small business rate relief for one business, and if a partnership shares the premises, they also share any rate relief. 

However, if a partner is in another building, this must be considered when applying for rate relief.  

Can I challenge my business rates if I think the rateable value is incorrect? 

Yes, you can challenge your rateable value through this GOV.UK link.  

The Valuation Office Agency will review this, and a rebate may be offered if it is incorrect.  

Need help with your finances? 

Whether you need help with your finances or navigating various taxes, Unbiased can quickly connect you to a qualified financial adviser or accountant.