A business rate is charged on most non-domestic properties, such as shops, offices, factories and holiday rental homes or guest houses.
It is calculated as the ‘rateable value’ of the property multiplied by the business rates multiplier set by central government.
Small business rate relief is available where:
- Only one property is used; and
- The property’s rateable value is less than £12,000
Currently 100% relief is available until 31 March 2015 (doubled from the usual rate of 50%) for properties with a rateable value of £6,000 or less. The rate of relief gradually decreases from 100% to 0% for properties with a rateable value between £6,001 and £12,000.
The chancellor has made three announcements in relation to business rates:
- The temporary doubling of small business rate relief from 50% to 100% will be extended to April 2016;
- The 2% cap on the RPI increase in the business rates multiplier will be extended to April 2016; and
- An increase in the £1,000 business rate discount for shops, pubs, cafes and restaurants with a rateable value of £50,000 or below, to £1,500 in 2015-16; and
A full review of the structure of business rates will also be undertaken by the government to report back by Budget 2016. This review will fiscally neutral.
The changes announced in the Autumn Statement are designed to support business and encourage growth and will have the greatest impact on small businesses.
The government estimates that:
- Around 385,000 of the smallest businesses will continue to receive 100% relief from business rates until April 2016;
- Around a further 190,000 will benefit from tapering relief; and
- The increase in the business rate discount for high street businesses will benefit an estimated 300,000 properties.