The Spring Statement is an opportunity to reflect on economic growth and borrowing forecasts, as well as announce forthcoming changes to taxation and Government spending. Albeit a relatively short speech this time around, the Chancellor did announce plans to accelerate the next business rates revaluation from 2022 to 2021, meaning taxpayers will now benefit from three-year revaluation cycles.
The change is to reflect rising rental costs by ensuring a fairer business rates system that alleviates the pressure from increasing overheads.
The announcement comes amidst a challenging time for bricks and mortar businesses, with a number of restaurant chains facing the chop as high street business rates soar. Jamie’s Italian, Byron Burger and Prezzo has each announced closures due to increasing financial hardships, as well other retailers including Toys R Us, M&S, Maplin and most recently, Mothercare.
Whilst the reforms are a step in the right direction and will support businesses in the long term, many are still feeling the pinch from the April 2017 changes, which brought the first revaluation and rates rise in seven years.
There are a number of reliefs available to help mitigate the rise in business rates. Small business rate relief, for example, is eligible to all companies whose rateable value is less than £15,000 and that only use one property. Under the scheme, eligible business won’t pay any relief on a property with a rateable value of £12,000 or less. For those values between £12,001 and £15,000, the rate of relief will decrease gradually from 100% to 0%. For example, if your rateable value is £13,500 then you’ll receive 50% relief on your business rates bill, whilst properties with a rateable value of £14,000 will receive 33% off their bill.
Businesses who own more than one property can still receive relief on their main property as long as none of their other properties have a rateable value of more than £2,899 and the total rateable value of all company properties is less than £20,000, or £28,000 in London.
Small businesses who do not qualify for the rate relief but have properties in England with values less than £51,000 will have their business rates calculated slightly differently using the small business multiplier. Currently, the small business multiplier sits at 48p, compared to the standard multiplier of 49.3p, something which is also slightly higher in the City of London.
Other exemptions apply including rural rate relief, which is eligible for businesses within a rural area with a population of less than 3,000 people, as well as charities and those located in enterprise zones.
To see how your business could benefit for business rates exemptions, contact your local Champion Accountants office today.