Business Rates are changing from 1st April 2023 with new valuations coming into force. It is going to have a significant impact on a lot of smaller businesses as they find their Rateable Values increasing and a question over whether Small Business Rates Relief will still apply.
Small Business Rates Relief is also a very common topic when we’re out viewing offices, so over the years we’ve built up a list of frequently asked questions that we thought worth putting in place as a useful future resource.
If your question isn’t covered below, then feel free to give us a call and we’ll talk you through it.
What is Small Business Rates Relief (SBRR)?
It’s exactly as it sounds really; it is there to provide relief for small businesses and reduce their tax burden.
Is Small Business Rates Relief available on every office?
No.
The availability of SBRR (Small Business Rates Relief) is linked to the Rateable Value of an office (see below!)
If the Rateable Value is below £12,000 then you can claim 100% business rates relief.
If the Rateable Value is £15,000 or above then there is no relief available.
If the Rateable Value is between £12,000 and £15,000 then it is a sliding scale of relief from 100% down to 0%. For example, a Rateable Value of £13,500 would mean you could claim 50% SBRR.
We’ve included a useful table below to help you calculate the discount available.
Who calculates the Rateable Value and how?
The Valuations Office Authority, or VOA, set the Rateable Values and review these every 5 years.
Broadly speaking, the Rateable Value should reflect the market rental value of the property at the time of the valuation.
Over the course of 5 years this can change dramatically. For example a whole neighbourhood could change and drive rents up (the Northern Quarter in Manchester between 2016 and 2021 is a great example of this) or the property itself could have been improved in that period.
So is the Rateable Value the amount I pay?
No.
So, this is where it gets a little more complicated so will use a few examples. In all instances, we’ll assume this is your only office in England & Wales so you are a qualifying business.
To calculate the Rates Payable, the VOA uses the Universal Business Rates (UBR) multiplier which, for smaller offices with a Rateable Value of under £51,000, is 0.499.
To work out the Rates Payable you multiply the Rateable Value by the UBR and then apply any SBRR.
We have included the table below to include the Rates Payable before and after any SBRR is applied.
| Rateable Value | Rates Payable (Using 0.499 UBR) |
SBRR Discount Available (%) |
Rates Payable after SBRR Applied |
| £12,000 (or below) | £5,998 | 100% | £0 |
| £12,250 | £6,123 | 91.60% | £514 |
| £12,500 | £6,248 | 83.30% | £1,043 |
| £12,750 | £6,373 | 75% | £1,593 |
| £13,000 | £6,498 | 66% | £2,209 |
| £13,250 | £6,623 | 58.30% | £2,762 |
| £13,500 | £6,748 | 50% | £3,374 |
| £13,750 | £6,873 | 41.70% | £4,007 |
| £14,000 | £6,998 | 33% | £4,689 |
| £14,250 | £7,123 | 25% | £5,342 |
| £14,500 | £7,248 | 16.70% | £6,038 |
| £14,750 | £7,373 | 8.30% | £6,761 |
| £15,000 | £7,498 | 0% | £7,498 |
Is Rateable Value determined by the size of the office?
No.
Remember the Rateable Value should reflect the rental value of a property.
In a prime location in Manchester, an office could attract a rent of £40 per sq ft. Theoretically therefore, it would only be 300 sq ft before it hit a Rateable Value of £12,000 (300 sq ft multiplied by £40).
In a less prime location, an office may attract a rent £12 per sq ft which in theory would mean it could be 1,000 sq ft and still have a Rateable Value of £12,000 (1,000 sq ft multiplied by £12) and qualify for 100% Small Business Rates Relief.
What if I open another office?
Small Business Rates Relief is aimed at small businesses so if you do open another office then there is an assumption that you are no longer small and therefore relief starts to fall away.
You will still benefit for 12 months on your main property but after that it does fall away except in the unusual circumstance of:
- None of your properties have a Rateable Value over £2,899
and
- The total Rateable Value of all your properties is below £20,000 (or £28,000 in London)
How do I find the Rateable Value of my office?
Head over to https://www.gov.uk/find-business-rates where you can search by postcode or address.
Important – if you are reading this prior to 1st April 2023 then remember to scroll down and look at the ‘Future’ valuation for 1st April 2023 rather than the current valuation.
Frustratingly, we often find that Royal Mail and the VOA use different postcodes so if your postcode doesn’t show any results, try using the street and town.
Will the Small Business Rates Relief change?
It is important to remember that Business Rates are a tax and any relief made available is set by the chancellor of the Government of the time so they can change. This is not under the control of your Landlord!
Why is the sliding scale of relief so small?
Good question and it’s a real bugbear of ours.
You can quite easily find two offices of a very similar size in very similar locations. One with a Rateable Value of £12,000 and the other with a Rateable Value of £15,000. The latter of which is instantly £7,500 per year more expensive because of the business rates.
We would love to see the upper end of relief pushed out from £15,000 to £18,000 (or higher!) so that there is less of a cliff edge to paying business rates.
