Government Extends Temporary Increase in the Level of Small Business Rate Relief
As business owners might be aware some properties are eligible for discounts on their business rates, known as ’business rates relief’. It is good news for businesses falling into the ‘small business’ category as the government has decided to provide a further temporary extension to the increase in small business rate relief in England until 31st March 2016.
However it should be noted that the category (small businesses) is not determined by the number of employees rather by the rateable value of the property they occupy. If your property has a rateable value below £18,000 (£25,500 in Greater London) you’re considered a small business.
The original small business rate relief scheme was introduced in 2005. It addressed the disproportionate burden that business rates placed on small businesses compared with larger concerns. Relief has been available under the scheme to businesses that generally occupy a single property below a rateable value threshold. The relief is funded by a supplement on the rates bills of higher value properties. To help fledgling businesses, as well as existing ones, it was announced in the March 2010 Budget that the level of small business rate relief would be temporarily doubled for one year.
The extra costs of the relief (the doubling effect) are being met by central government rather than being funded by the supplement on other ratepayers. The original policy objectives were to provide temporary help with business rates when small businesses needed it most during the economic recovery. Those businesses falling into the small business category were able to use their improved cash flow to help grow their businesses. This was also to help protect existing businesses that might be struggling with relatively high occupation costs whilst experiencing low revenues due to the recession. As of now all parts of the economy are growing (according to the government) but the government still has a huge amount to do by continuing to create jobs and supporting businesses to grow. The extension of the temporary increase will not only help existing businesses but it will encourage new start-ups because the government keeps supporting small entities via doubling then extending the rate relief on an ongoing basis.