Understanding Small Business Rates Relief 2023: Benefits, Eligibility, and Opportunities

As the wheels of commerce keep turning, small businesses continue to play an essential role in fuelling the UK economy. Over the past few years however, SMEs have been hit hard by brutal covid lockdowns and a general lack of support by successive government cabinets. 

In the quest to support these invaluable contributors the government has devised mechanisms to lighten their financial burdens. One that has garnered attention is Small Business Rates Relief (SBRR). In this article, we’ll explore the different aspects of SBRR, unveiling its benefits, eligibility criteria, and the opportunities it presents for small businesses to thrive.

What is Small Business Rates Relief?

Small Business Rates Relief, or SBRR, is a lifeline extended to small businesses to help alleviate the weight of business rates – a local tax imposed on non-residential properties. This relief mechanism was introduced with a twofold purpose: to aid small businesses in overcoming financial challenges, and to stimulate local economies by freeing up resources that can be reinvested.

SBRR doesn't merely focus on short-term gains; it operates as a strategic investment in the future. By enabling small businesses to mitigate the weight of business rates, SBRR nurtures an environment conducive to sustained growth and prosperity. It emboldens business owners to make forward-looking decisions, amplifying their potential for long-term success.

What are the benefits of Small Business Rates Relief for small businesses?

SBRR brings an array of benefits for small businesses, primarily acting as a strategic catalyst for growth. SBRR provides financial relief by reducing business rates, liberating funds for vital operations. Lower rates offer a competitive advantage, fueling product improvements, expansion, and new market exploration. 

The relief acts as a launchpad for growth, emboldening businesses to diversify and hire, while subsequently injecting vitality into the local community through job creation and economic dynamism. These benefits encompass:

• Financial Respite

SBRR significantly reduces the business rates payable, easing the financial pressure on small enterprises. This relief can empower them to allocate funds to other critical areas of their operations.

• Competitive Edge

As a direct consequence of reduced business rates, small businesses gain a competitive edge. They can direct the saved resources towards enhancing products, improving services, or expanding their reach.

• Stimulated Expansion

SBRR can be a stepping stone towards expansion. The financial cushion it provides might embolden businesses to explore new markets, diversify their offerings, or even hire additional staff.

• Community Boost

By fostering the growth of small businesses, SBRR contributes to the local community's prosperity. Thriving businesses lead to more job opportunities and a dynamic economic landscape.

Who can claim Small Business Rates Relief?

Now that we've gained an overview of SBRR's advantages, let's delve into the question of eligibility. In essence, SBRR is designed to lend a helping hand to businesses that occupy relatively smaller spaces, allowing them to flourish without being crushed under onerous tax obligations.

Consider a quintessential example. Imagine a charming independent bookstore nestled in a bustling neighbourhood. With SBRR, this quaint bookstore could channel more of its revenue into enriching its collection or hosting community events, creating a thriving literary hub that benefits both book enthusiasts and the local economy.

To be eligible for SBRR, businesses must satisfy certain criteria, including:

Property Size

The rateable value of the property must fall below a specific threshold - less than £15,000. This value varies across regions and reassessments.

Independent Status 

Chains and conglomerates, unfortunately, aren't eligible. SBRR is tailored for the unsung heroes of business – the independents.

Primary Use 

Your property must be used predominantly for business purposes, reinforcing the relief's intent to aid enterprises.

Local Presence

Your business must occupy the property that it seeks relief for, nurturing a direct connection with the local community.

Single Property

Your business should ideally use only one property (although you may still be able to get relief if you use more)

What can you claim?

SBRR isn't a one-size-fits-all remedy, it manifests in different shades and levels of relief. The amount of relief you can claim hinges on factors like the rateable value of the property, the location, business type and the evolving dynamics of business rates revaluation.

The guidance document for local government on HMRC’s website contains useful information regarding claimable amounts. But here’s a quick breakdown:

• You are exempt from paying business rates on a property if its rateable value is £12,000 or below, provided it's the sole property used by your business.

• For properties falling within the rateable value range of £12,001 to £15,000, the relief rate gradually decreases from 100% to zero.

• Example: For a rateable value of £13,500, a 50% reduction will be applied to your bill. Similarly, with a rateable value of £14,000, a 33% reduction will be granted.

• The Retail, Hospitality and Leisure Business Rates Relief scheme will provide 75% relief on your business rates bills for the tax year 2023/24 (April 1st 2023 - March 31st 2024) with cash cap limit of £110,000 per business. (For eligible, occupied, retail, hospitality and leisure properties, as per HMRC's guidance document.)

If you use more than one property

• Upon acquiring a second property, the ongoing relief for your primary property will persist for a duration of 12 months. Following this period, you remain eligible for small business rate relief on your primary property if the following two conditions are met:

1. None of your additional properties possess a rateable value surpassing £2,899.

2. The collective rateable value of all your properties remains under £20,000 (£28,000 in London).

Here's a snapshot of the of how levels of SBRR relief vary:

Full Relief

Properties with a low rateable value might be eligible for full relief, which can significantly reduce or completely eliminate the business rates burden.

Tapered Relief

As the rateable value increases, relief might be granted on a sliding scale. This means that the reduction in rates gradually diminishes as the rateable value edges higher.

Threshold Hurdles

Businesses that approach the rateable value threshold can also benefit. Relief could be structured to offer substantial assistance, acting as a bridge towards full relief. However, it's important to note that eligibility and the level of relief can vary based on specific criteria.

Revaluation Realities

The relief landscape isn't static; it's shaped by periodic revaluations. When business rates are reassessed, SBRR can adapt to align with the evolving economic backdrop, ensuring that eligible businesses continue to receive the appropriate level of support.

How to claim

To make a claim for SBRR you need to contact your local council in order to check your eligibility and get instructions on how to apply - this will typically be via an online form on your council's website. 

You can also find out if you can get any other types of business rates relief in addition to small business rate relief. 

If you require any advice on business rate or other tax matters speak to our friendly experts.

As small businesses continue to be the lifeblood of economies worldwide, it's heartening to see schemes like Small Business Rates Relief act as fortifying agents. From granting financial respite and boosting competitiveness to nurturing community growth, SBRR paints a picture of optimism for small businesses. By understanding the eligibility criteria and the diverse relief options available, entrepreneurs can wield SBRR as a powerful tool on their path to success.