How to make sure your business rates bill isn’t too high

All three parties say they’ll revamp this tax on businesses. Meanwhile, here’s how to cope with it

In this election all three of the main parties are promising a rethink of the business rates system that has caused many smaller firms so much pain – particularly in retail, but also in other sectors where small outfits with physical premises compete with online players exempt from this tax. Almost 10% of business-rate payers are in arrears.

Still, there are no easy answers. Business rates raise £30bn a year for local authorities and the Treasury is unlikely to support changes that will require it to find money for councils elsewhere. Meanwhile, the current system is out of date. Business rates are calculated on the basis of the annual rent payable on a premises, but rateable values have not been assessed since 2017, since when rents have fallen in many pace.

Are you paying too much?

There is some good news, however. Various concessions have been introduced over the years that reduce or negate the business rates bill for firms below a certain size.

So you need to understand how the system works and check your bill carefully to make sure you’re paying the right amount. The small business concessions are supposed to be applied automatically, but that doesn’t always happen.

Most importantly, if your business is based in a property with a rateable value of less than £12,000, you should be exempt from business rates altogether. In addition, businesses in properties with rateable values between £12,000 and £15,000 pay reduced bills according to a sliding scale.

If you’re above the £15,000 cap, but below £51,000, check that you’re being charged the “small business multiplier”; this is how your local authority calculates your bill and it’s more generous than the formula used for larger firms.

There is also help available for businesses in properties whose rateable values were revalued in 2017, with the government promising their bills will not increase by an unmanageable amount in one go.

This year, smaller businesses’ bills should not have increased by more than 20% because of the revaluation (or 10% if your rateable value is below £20,001). Next year, increases are capped at 25% (15% for the smallest firms).

Finally, there are additional discounts for certain industries. In the retail sector, which accounts for a quarter of all business rates revenues, smaller firms with rateable values below £51,000 get a third off their bill. The Conservatives are promising to raise this discount to 50% while they review business rates.

One other possibility is worth considering for some small businesses. In around 50 designated enterprise zones around the country, substantial discounts on business reliefs are available for up to five years after you move in. In some cases relocation could save you thousands of pounds.