Business rates savings for small retailers

June 10, 2019

Small retailers in England should now be enjoying 33% off their business rates bills. However, businesses need to check their accounts as some councils are not giving the discount automatically.

The business rates retail discount scheme, in place from April 2019, applies to occupied retail properties with a rateable value of less than £51,000, and will operate for the years 2019/20 and 2020/21. The relief applies where a property is being wholly or mainly used as a shop (whether selling goods or providing services), restaurant, café or drinking establishment. Some of the less obvious types of establishment that qualify include:

  • display and show rooms;
  • second-hand car lots;
  • markets and garden centres;
  • funeral directors;
  • car hire.

Each local council can, based on Government guidance, determine for themselves which particular properties are eligible or ineligible, so the exact definition will differ around the country. Property used to provide certain businesses and services are ineligible for the discount, including: financial services (such as bureaux de change, payday lenders, betting shops and pawn brokers), other services (such as estate agents and employment agencies), medical services (such as vets, dentists, doctors, osteopaths and chiropractors) and professional services (such as solicitors, insurance agents, financial advisers and tutors).

The discount is one-third of the rates bill after deducting other reliefs such as small business rate relief. Therefore, there will be no discount if 100% small business rate relief is available. Some councils are insisting that the discount is applied for rather than it being applied automatically.

Example – the reduced bill

The rates bill for a shop with a rateable value of £13,500 and eligible for small business rate relief of 50% will be £2,210, that is:

  • normal rates of £6,629 (£13,500 x 0.491) less
  • small business rate relief of £3,314 (£6,629 x 50%) and
  • the one-third discount of £1,105 ((£6,629 – £3,314) x 1/3)).

If you need help with working out your situation, let us know.

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