Business rates exemptions, reductions and reliefs

The pressure placed on government to reduce business rates has led to a range of reliefs and exemptions being made available, with some local authorities also offering discretionary reliefs to local businesses that meet their criteria.

Business rates have placed a huge burden on UK companies since their introduction in 1990, and getting a reduction in monthly payments can make the difference between trading on as a solvent company, or sinking into unmanageable debt and eventually closure.

It is also important that directors are aware of, and take full advantage of any reductions offered by the local authority which are in addition to those available nationally which this article will cover.

So what exactly is available on a national scale with regard to business rate reliefs and exemptions, and what might you be able to claim for locally?

What is small business rate relief?

The business rate relief scheme is based on the rateable value of your property, which must be less than £15,000 in order to be eligible.

• For properties with a rateable value up to £12,000, will get 100% relief
• Those properties with a rateable value of between £12,001 and £15,000 will be entitled to some relief on a sliding scale which decreases gradually from 100% to 0%
• If your company has more than one property, each having a rateable value not exceeding £2,899, the total rateable value when added together is used as the basis for reliefs.

What is rural rate relief?

There is a relief rate of up to 100% for qualifying rural businesses located in an area with a population of less than 3,000. Qualification includes sole village shops, post offices, and food stores with a rateable under £8,500, or sole petrol stations and pubs with a rateable value up to £12,750.

Enterprise zones

Forty-eight enterprise zones currently exist in England, a scheme intended by the government to boost trade, help local communities, and provide jobs in local areas.

If you have started a business in one of these zones or are relocating your business there, you may be eligible for up to 100% relief on business rates for up to five years (with a maximum limit of £55,000 per year). While some zones started earlier, generally, businesses need to have located within specific zones, often between April 2016 and March 2022, to qualify for relief.

You can find a full list of enterprise zones in England on the HM Government website, where you will also see the contact details needed to find out more information and apply if you meet the requirements.

Exempted buildings and empty buildings reliefs

Properties exempt from business rates include:

• Those used for the welfare or training of disabled people
• Places of religious worship
• Agricultural land and buildings including fish farms
• Certain empty buildings 

If your business premises are going to be empty for some time, you are not liable to pay business rates for up to three months (six months for industrial), after which time the normal rules apply again unless you fall into one of these categories, in which case the reliefs may be extended:

• Properties with a rateable value of less than £2,900
• Listed buildings (until reoccupied)
• Properties owned by charities where the next use is likely to be charitable
• Community amateur sports clubs
• Properties in administration, liquidation, or owned by personal representatives

Retail relief

You may be able to get 40% (capped at £110,000 per business) deducted from your business rates bill if yours is a retail property, but there are strict eligibility criteria:

• The property must be occupied premises and mainly used for public-facing sales or services like shops, pubs, restaurants, cinemas, and hotels.
• The maximum relief any single business can receive is £110,000, regardless of how many properties they occupy.

This scheme ends 1 April 2026.

Charitable rate relief

Should your business premises be used for charitable work, you may be eligible to receive up to 80% relief for business rates.

Other discretionary reliefs and reductions may be available to cover the remaining 20%, so it is well worth checking with your local council for details, and to find out if you would be eligible.

How are business rates calculated?

The rateable value of your premises is used to calculate your business rates – you can find out the current rateable value of a non-domestic property by inputting the postcode into the Valuation Office Agency (VOA) website.

This is where you will also find the ‘multiplier’ – the number of pence for each pound of rateable value. Simply multiply the rateable value by the multiplier for your area and business size, deduct any applicable reliefs or reductions, and you arrive at your business rates figure for the year.