How to apply for small business rate relief
In this article
- What are business rates, and what parts of a business are covered by them?
- Who is responsible for paying business rates?
- Will you need to pay business rates if you’re working from home?
- How to estimate and check your business rates
- How to access small business rate relief
- Grow your business as a Trusted Trader
Keep reading to find out more about business rates and how to check them, plus how to apply for small business rate relief.
What are business rates, and what parts of a business are covered by them?
Business rates are a type of cost that often catches people out when they move into business premises for the first time. They’re a tax charged by local councils on non-domestic property and apply to many businesses operating from a physical space, whether that’s owned or rented.
The charge applies to properties used mainly for business activity. Shops, offices, cafés, workshops and warehouses are all commonly subject to business rates.
In some cases, this may include part of a home, particularly if a room or area is set aside solely for work and is not used for normal living. When someone works from home without a clearly defined business area, business rates are less likely to apply, although the final decision sits with the local council.
Who is responsible for paying business rates?
The amount charged is based on something called a rateable value. This is set by the Valuation Office Agency and represents an estimate of what the property could have been rented for on the open market at a fixed point in time. Local councils then use this figure to calculate the bill, applying a nationally set multiplier and accounting for any relevant relief.
If your property's rateable value is less than £15,000 and your business uses only one site, you may be able to get business rate relief. For properties with a rateable value of less than £12,000, you'll pay no business rates. For those with a rateable value between £12,001 and £15,000, the rate of relief will gradually reduce from 100% to 0%.
There are a few things to keep in mind:
- Responsibility for paying business rates usually falls to the occupier of the property. That remains the case even if the building is rented.
- Empty properties are normally charged to the owner, although there are time-limited exemptions in certain situations.
- Some types of property are not charged at all; for instance, agricultural land and buildings used for farming typically qualify for business rate exemption. Additionally, very small structures may fall outside the system depending on how they’re used.
Will you need to pay business rates if you’re working from home?
As a general rule, you won’t need to pay business rates if you’re using just a small part of your home for business purposes. For example, if you’re a self-employed freelancer and you work at your computer, you don’t need to pay.
However, there are some circumstances in which someone working from home might be required to pay business rates.
- If your property is split into domestic and business parts, you’ll need to pay business rates for the parts that aren’t used for domestic purposes. For example, if you run a corner shop and live above it, you’ll need to pay business rates on the shop part of the property as it’s separated from your living areas.
- Equally, if you sell things to customers who visit the property, you’ll have to pay some business rates. For example, you may run a business selling products directly from your garage.
- If you employ anyone at the property, it’s classed as a workplace, and business rates will apply.
How to estimate and check your business rates
You can check a property’s rateable value online through the Valuation Office Agency. Doing so can help you understand how your bill has been calculated and see how your premises compare with others nearby. If you believe the valuation is wrong, there’s a formal process for challenging it, although this should be approached carefully and supported with evidence.
Read our guide on how much tax small businesses need to pay for more tips.
How to access small business rate relief
Small business rate relief exists to reduce the cost for businesses operating from lower-value properties.
In England, relief is available to businesses that use a single property below a set rateable value, with the level of support reducing as values increase. Many eligible businesses receive this automatically, but that’s not always the case.
If the relief doesn’t appear on your bill, you can apply directly through your local council. This usually involves confirming details about your business and that you don’t occupy additional properties outside the permitted limits. Once the council has approved the application, the adjusted amount will be shown on your business rate bill.
Business rates can change following revaluations or changes in how a property is used, so it’s worth reviewing your bill each year. If anything looks unclear, your local council is best placed to explain how the charge was calculated and whether further support is available.
Grow your business as a Trusted Trader
Are you considering growing your small business? If you’re unsure where to start and how to build your reputation in the industry, you might want to consider becoming a Which? Trusted Trader.
Each of our Trusted Traders gets access to their own business page to display reviews and previous examples of their work, which is a sign to would-be customers that you’re a reputable business to work with.
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