Skip to main content

Five business rates relief schemes your company could be claiming

When you start a new business, you’ve got a lot to think about. From company formation and registering with HMRC, to hiring staff and tracking down the perfect premises, you’ll find plenty of things to keep you busy – and plenty of things that will be a drain on your finances, too.

Chances are you’ve forecasted must-have overheads like commercial rent, insurance and utilities in your initial business plan. But one of the crucial oversights that many new business owners fail to plan for is just how much they’ll be expected to pay to their local authority as part of their company’s business rates.

If you’re using a building (or even part of a building) for non-domestic purposes, you’ll probably be expected pay a tax to your local council in the form of business rates. Councils usually send out business rates bills in February or March each year, and the amount you’re charged depends mostly upon the rateable value (or market rent value) of the property you’re using.

Because business rates are based largely upon the value of your premises rather than the healthiness of your business, bills can often vary wildly among competitors – and it’s not rare to end up with a huge bill that could place your business in a sticky situation. Fortunately, there are several accessible relief schemes you can apply for to slash your business rates bill substantially.

The relief scheme that’s right for you will depend upon your company’s own, unique situation – but to help you get started, here are five of the most common schemes worth checking out:

1. Small business rate relief

If your property’s rateable value is less than £15,000, and your business only uses one single property, you should be eligible to apply for small business rate relief.

That means if your property has a rateable value of £12,000 or less, you won’t need to pay your business rates bill at all. If your premises have a rateable value of between £12,001 and £15,000, your rate of relief will drop gradually from 100% to 0%, respectively. For example, if your company’s premises have a rateable value of £13,500, you can expect to get a 50% discount on your bill.

Do you own or operate your business out of more than one property? You still might be able to apply for small business rate relief.

When you get a second property, you’ll continue to enjoy existing relief on your main property for a period of twelve months – and you can continue to claim with the scheme for your main property if none of your properties have a rateable value above £2,899, and the total rateable value of all your properties is less than £20,000. If you’re based in London, that cap is higher, at £28,000.

2. Rural rate relief

Is your business based in a rural area with a population of less than 3,000 people? You should apply for rural rate relief.

If you’re in an eligible area, are the only village shop or post office and have a rateable value of up to £8,500, you won’t have to pay your business rates bill at all. Likewise, if you’re the only public house of petrol station in a rural area and have a rateable value of no more than £12,500, you’ll get full relief from your bill.

3. Charitable rate relief

Is your business a charity? You should apply for the government’s charitable rate relief scheme. All community amateur sports clubs and charitable groups can have up to 80% of their business rates bill wiped out if their business premises are being used for charitable purposes.

Charitable companies may also want to see if they can have their business rates discount topped up to 100% as part of what’s called “discretionary relief”. It’s worth pointing out that if you do not qualify for charitable rate relief but are a non-profit company or a volunteer organisation, you could still qualify for some form of discretionary relief.

4. Enterprise zone relief

If you are planning to locate your business within a recognised UK enterprise zone – or would like to start your own enterprise zone – you should qualify for a fairly hefty business rates relief package.

What are enterprise zones? They’re essentially just designated start-up areas across England that offer good tax breaks and varying levels of government support. They were introduced in 2012 as part of the UK Government’s commitment towards helping small businesses grow – which is why companies based within an enterprise zone can expect substantial discounts on their business rates.

Although your local council decides precisely how much relief you’ll get by working in an enterprise zone, relief goes up to £55,000 per year, spread over five years.

If this sounds like something you’d like to explore, you should find your nearest enterprise zone to chat about moving your company in.

5. Hardship relief

If your business is really struggling to make it financially, you could look into applying to your local council for hardship relief.

Obtaining hardship relief on your business rates bill can be a little bit trickier than other relief schemes, as the parameters surrounding hardship relief are often discretionary and change on a case-for-case basis. But no matter what, to be eligible you will need to be able to show your local council that your business would be placed under severe financial strain without some form of relief.

More important still, you need to be able to explain to your council why giving your company hardship relief is going to be in the interests of local people.

At the end of the day, the business rates relief scheme most suitable for your business will boil down to your company’s current circumstances or location – but they’re all worth exploring. So, what are you waiting for?

Contact your local council now and find out if you’re eligible for rate reductions. After all, those who don’t ask, don’t get.

Growth Company Investor: free trial